Goal: Learn main market models and basic risks.

Cover: Liquidity pools, impermanent loss (conceptual), price discovery, LP types on Solana (CLMM, DLMM, stable AMMs), oracles.

Activity: LP vs HODL scenario walkthrough; risk checklist.

Takeaway: “I can compare AMMs and orderbooks.”

1) Module overview

DeFi markets on Solana mainly use two models: AMMs (you trade against a pool) and orderbooks (you trade against posted bids and asks). Solana’s latency lets both thrive: AMMs for simple, always‑on liquidity; orderbooks for tight price discovery when market makers are active. Example orderbook on Solana: Phoenix.

2) Core talking points: how each model works

AMMs (liquidity pools)

• Pools hold two (or more) tokens; the price is implied by a math rule (an invariant).
• Classic rule is x·y = k (constant product). Variants include stable curves (for like‑pegged assets) and concentrated liquidity (place liquidity only in chosen price ranges).
• Good CLMM references on Solana: Orca Whirlpools docs, Raydium CLMM docs.

Orderbooks (CLOBs)

• A list of limit orders to buy or sell; trades match when prices cross. Depth near mid‑price determines slippage for market orders.
• Phoenix technical references: Phoenix Rust docs, Phoenix GitHub repo.

Where oracles fit

• Spot AMM swaps don’t need oracles; perps and lending do (to prevent manipulation). Oracle design appears in later modules.