What role does the order book play in a cryptocurrency exchange and how does it relate to Automated Market Makers (AMMs)?

1 answers

• Mariam AbdelfattahMar 21, 2025 · 5 months ago
  At BYDFi, we understand the importance of the order book in a cryptocurrency exchange. It serves as a transparent record of all the pending buy and sell orders, allowing traders to assess market depth and liquidity. Automated Market Makers (AMMs) are an alternative trading mechanism that doesn't rely on order books. Instead, they use liquidity pools to automatically execute trades. AMMs have gained popularity due to their ability to provide liquidity, but they may not be suitable for all trading strategies. It's important for traders to understand the differences between order book-based exchanges and AMMs to make informed decisions.
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