AMM reserves determine the price of your next swap

An automated market maker (AMM) sets your swap price from the tokens held in its pool and the size of your trade. In a constant-product pool, a larger trade takes a bigger share of one reserve and moves the price against the trader. The displayed spot price is a starting point; the amount you receive also depends on fees and trade size.

How do reserves set an AMM’s spot price?

In a constant-product pool, the ratio between the two token reserves sets the marginal price. If a pool holds 10 ETH and 20,000 USDC, its reserve ratio implies a spot price of 2,000 USDC per ETH before fees and trade impact.

The pool’s pricing rule is often written as x × y = k, where x and y are the token reserves and k is their product. When a trader adds one token and removes the other, the reserves shift while the pool’s formula determines the output. In the example, trading 1 ETH for USDC would return about 1,818 USDC before fees, below the 2,000 USDC spot rate, because that trade is large relative to the 10 ETH reserve.

That gap is price impact: the change in price caused by the trade itself. It grows when the trade is large compared with available liquidity, so two swaps in the same pool can receive different average prices.

Why can your swap quote differ from the spot price?

A quote estimates the output after applying the pool’s curve and fee. The spot price describes the next, very small trade; the execution price averages the rates across all tokens in a larger trade. Network costs may also affect the transaction’s total cost, but they do not change the pool’s quoted token ratio.

A base swap uses the same reserve logic when routed through a constant-product pool. For the transaction steps, see this guide to how to swap on Base and add liquidity; the pricing mechanics here apply across pool-based swaps. Before confirming, compare the quoted output with the spot rate and check the transaction’s slippage limit, which sets how far the final output may fall before the swap reverts.

• Trade size: A smaller order usually shifts reserves less and has lower price impact.
• Pool depth: More usable liquidity can reduce the effect of a given order.
• Fees and routing: Fees reduce output, while a route through multiple pools can add costs and price impact.

Do all AMMs price swaps from the reserve ratio?

No. The reserve ratio is a useful guide for constant-product pools, but it does not describe every AMM design. A concentrated-liquidity pool, for example, makes liquidity available across selected price ranges, so the active liquidity around the current price shapes the quote.

For a trader, the practical comparison is the quoted output for the same input amount, including fees and any route across pools. A pool with large total balances may still offer less liquidity at the current price than its headline reserves suggest. The quote captures the pool’s current curve and route; a price chart alone does not.

Liquidity providers face a related trade-off: depositing both assets lets them earn a share of trading fees, while price movement can change the value and mix of their position relative to simply holding the tokens. In range-based pools, liquidity outside the chosen range may not participate in swaps until the price returns. The next step is to compare the live quote, fee and slippage limit before submitting; after execution, the pool’s updated reserves set the next trade’s starting price.