AMM vs CLOB

The technical comparison between AMM (Automated Market Maker) and CLOB (Orderbook architecture ).

Feature Comparison

Core Mechanism	Algorithmic pricing via cost function C(q)	Explicit bids and asks submitted by traders
Price Meaning	Implied probability derived from LMSR curve	Explicit probability agreed by market participants
Price Discovery	Passive – probability emerges from formula	Active – probability discovered via competition
Order Types	Buy / Sell only	Limit, post-only, IOC, maker-only
Capital Utilization Market Making Efficiency	Low capital must continuously support the entire probability curve; most funds are idle or defending unlikely outcomes	High Capital is deployed only at chosen odds; market makers can concentrate liquidity where real trading occurs
Slippage	Inevitable – price always moves against the trader	Optional – user chooses price, no slippage if filled
Liquidity Type	Synthetic, curve-based	Real, intent-based
Market Depth	Artificial and brittle	Explicit and inspectable
User Experience	“Trade against the house”	“Trade against other traders”