Correlated AMM: How Automated Market Makers Move Together in Crypto

When you trade on a decentralized exchange like correlated AMM, an automated market maker that moves in sync with others due to shared liquidity, pricing algorithms, or token pairs. Also known as linked AMMs, it doesn't operate in isolation—its price feeds, slippage, and liquidity shifts often mirror those on other platforms. This isn't coincidence. It's the result of how liquidity flows between protocols, how arbitrage bots act across chains, and how token pairs like ETH/USDC are traded everywhere at once.

Most DeFi users think of AMMs like Uniswap or SushiSwap as standalone systems. But in reality, when the price of ETH drops on Uniswap, you’ll often see the same dip on SushiSwap within seconds—not because users are selling everywhere at once, but because the liquidity pools, reserves of token pairs that power decentralized trades are connected through arbitrage. These bots scan multiple DEXs, buy low on one, sell high on another, and force prices to align. That’s what makes AMMs correlated. The same thing happens with DEX trading, trading crypto directly on decentralized exchanges without intermediaries. If a major token like LUSD gets dumped on one platform, traders rush to others, dragging prices down across the board. This correlation isn’t a bug—it’s the system working as designed.

But here’s the catch: when AMMs move together, it’s harder to find arbitrage opportunities. It also means a flash crash on one exchange can trigger panic sells on others. That’s why smart traders watch not just individual DEXs, but the overall pattern of price movement across platforms. If you’re staking in a liquidity pool on SushiSwap v3, you need to know if the token pair you’re providing is also heavily traded on Uniswap or Curve. A correlated AMM setup means your impermanent loss isn’t just tied to one platform’s volume—it’s tied to the entire DeFi ecosystem’s behavior.

Looking at the posts here, you’ll see real examples of this in action. SushiSwap v3’s concentrated liquidity model makes it especially sensitive to price shifts from other DEXs. Bridge hacks and cross-chain volatility—like those seen in the Wormhole exploit—can trigger ripple effects across AMMs. Even something as simple as a new airdrop on Base network can shift trading volume and cause correlated moves in tokens like LIMITLESS or LUSD. You won’t find a single post that says "correlated AMM" outright—but you’ll see the pattern everywhere: in how liquidity shifts, how prices react, and how traders adapt.

Understanding correlated AMMs isn’t about memorizing formulas. It’s about seeing the bigger picture: DeFi isn’t a collection of isolated tools. It’s a network where every trade, every pool, every bot is connected. And if you’re trading, staking, or just holding tokens, you’re part of that network. The posts below show you exactly how this plays out in real projects—what works, what fails, and how to protect your capital when everything moves at once.