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. How the Price Changes (The AMM Formula)Prices in the pool do not come from an order book (like a stock exchange); they are governed by an algorithm. Most AMMs use a constant product formula:x × y = kIn this formula, x represents the amount of meme coins and y is the amount of the base asset (like SOL or ETH) in the pool. The total liquidity, k, remains constant.When people buy: They deposit base assets into the pool and take out meme coins. This increases the meme coin supply and decreases the base asset supply, pushing the price of the meme coin up.When people sell: They deposit meme coins and take out base assets. This increases the base asset supply in the pool, driving the price of the meme coin down.
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