Automated Market Maker Interview Guide
Automated market maker interview guide for AMM pricing, reserves, curves, arbitrage, fees, slippage, and market-making caveats.
Candidates explaining AMM mechanics in digital-asset quant interviews.
AMMs quote through formulas
An automated market maker uses a rule or curve to determine trade prices from pool state. The rule replaces some human quoting decisions with deterministic mechanics.
Reserves define price impact
A trade changes pool reserves, which changes the next price. Larger trades relative to pool size create larger slippage and stronger price impact.
Concrete example
In a two-asset constant product pool, buying one asset removes it from the pool and adds the other asset, moving the implied price along the curve.
Arbitrage and fees shape outcomes
Arbitrageurs can realign AMM prices with external markets, while fees compensate liquidity providers. Neither mechanism removes all risk.
Common mistakes
Candidates often say AMMs are just order books without orders. A stronger answer explains reserve-based pricing and how inventory changes after trades.
Practice the pattern
Use the LeetQuidity curriculum and calibration to turn this topic into a focused practice plan.