Automated Market Makers (AMMs) improve price discovery by:

1. _Providing liquidity_: AMMs supply liquidity to the market, allowing buyers and sellers to trade at fair prices.

2. _Reflecting market conditions_: AMMs adjust prices based on market conditions, such as supply and demand, to reflect the true value of assets.

3. _Encouraging rational trading_: AMMs promote rational trading by providing fair and transparent prices, reducing the impact of emotional and irrational trading decisions.

4. _Reducing information asymmetry_: AMMs help reduce information asymmetry by providing real-time prices and trading data, allowing all market participants to have equal access to information.

5. _Facilitating price adjustment_: AMMs help prices adjust quickly to changing market conditions, reflecting the true value of assets.

6. _Improving market efficiency_: AMMs help improve market efficiency by reducing transaction costs, improving liquidity, and promoting better price discovery.

7. _Enhancing market transparency_: AMMs provide transparent prices and trading data, allowing market participants to make informed trading decisions.

By improving price discovery, AMMs help ensure that assets are fairly valued, reflecting their true economic value. This leads to more efficient markets, better trading decisions, and a more stable financial system.