Does a Higher ‘K’ Value in the Formula Indicate a Larger or Smaller Liquidity Pool?

A higher 'k' value in the constant product formula (x y=k) indicates a larger liquidity pool. Since 'k' is the product of the two asset reserves (x and y), a larger 'k' means the pool holds a greater total quantity of assets.

Larger liquidity pools generally offer lower slippage for trades of a given size because the trade's impact on the overall reserve ratio (x/y) is proportionally smaller. The size of 'k' is a direct measure of the pool's depth.