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    Knowledge base

    Market mechanics

    The calculators here work from pool reserves and constant-product arithmetic. That is one way a price gets made. These pages explain the other one, and where the two stop being comparable.

    Where does the number on an exchange actually come from?

    How an order book makes a price

    An order book has no reserves and no curve. The price is the last trade, and the next one is whichever resting limit order the next market order reaches.

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    Both sides call it liquidity — why can only one of them disappear?

    Order-book depth is not pool liquidity

    Pool liquidity is capital locked in a contract. Order-book depth is a promise its owner may withdraw at any moment. The two numbers are not comparable.

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    How do I tell whether this book says what it appears to say?

    Reading a crypto order book you did not build

    Five things a visible order book lets you observe, what each is also consistent with, and the larger part of the picture that stays invisible from outside.

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    Everybody was selling anyway — so why did the forced orders make it so much worse?

    Why a liquidation is not a stop-loss

    A stop-loss is an order you shape and may withdraw. A liquidation is one the venue must send, in the second the book is thinnest.

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    The price went vertical and nothing had changed — so what was doing the buying?

    A short squeeze is the same cascade, running upward

    The same margin arithmetic with one sign turned around. A forced short close is a market buy, and upward there is no floor to stop it.

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    Both numbers get quoted before every big move — what do they actually tell you?

    What funding rate and open interest actually say

    Funding is a payment between traders rather than a fee or a forecast, and open interest counts what is open without ever saying at what leverage.

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    What this section is for

    Explaining a mechanism, not recommending a trade. Nothing here predicts a price, rates a venue or tells anyone what to do with their money — see the risk disclaimer. Where a figure was measured, it carries the date it was measured on.

    Run the arithmetic instead

    Every calculator states its inputs, its assumptions and where it stops — the same discipline these pages are written in.

    Open the calculators