# ⚖️ Liquidity Pools on DEX ⚖️

Besides the [AMM ](https://teneofinance.gitbook.io/teneo-finance/tenxxx-token-ecosystem/automated-market-maker)another important part of the ecosystem is the existence of liquidity pools. With them Teneo creates trading pressure on the open market for [arbitrage](https://teneofinance.gitbook.io/teneo-finance/introduction/untitled).\
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As soon as the price of an [underlying token](https://teneofinance.gitbook.io/teneo-finance/tenxxx-token-ecosystem/underlying-token) or a [tenXXX ](https://teneofinance.gitbook.io/teneo-finance/tenxxx-token-ecosystem/tenxxx-token)token changes in one pool, every other pool will follow because there are profit opportunities for [arbitrage traders](https://teneofinance.gitbook.io/teneo-finance/introduction/untitled).\
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The liquidity pool also gains reflows like the pools of AMPL getting rebases. \
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As an example: \
LP tenETH/BUSD -> x \* y = k -> 100*\** 100 = k -> [reflow ](https://teneofinance.gitbook.io/teneo-finance/tenxxx-token#reflows)-> 101 \* 100 = k -> the price goes down for [tenETH](https://teneofinance.gitbook.io/teneo-finance/tenxxx-token-ecosystem/tenxxx-token). \
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BUT: **The** [**AMM** ](https://teneofinance.gitbook.io/teneo-finance/tenxxx-token-ecosystem/automated-market-maker)**ratio does not change.**\
So more [arbitrage ](https://teneofinance.gitbook.io/teneo-finance/introduction/untitled)opportunities are generated by price differences and with this creating more [arbitrage ](https://teneofinance.gitbook.io/teneo-finance/introduction/untitled)trading pressure.

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How liquidity pools work: [Uniswap](https://docs.uniswap.org/protocol/V2/introduction)
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