How does Uniswap achieve efficient price discovery without an order book?

[nihalsari]

Uniswap relies on constant function market makers (CFMMs) combined with arbitrage incentives. External traders align Uniswap prices with centralized exchanges, effectively outsourcing price discovery. Advanced users exploit this by monitoring latency, gas conditions, and cross-venue spreads to execute arbitrage or MEV-aware trades during volatile periods.