How Do Hybrid AMM Models, like Curve’s StableSwap Invariant, Improve upon the Constant Product Formula for Stablecoin Trading?

Curve's StableSwap invariant is a hybrid model that combines the constant product formula with a constant sum formula. This creates a pricing curve that is very flat in the middle, allowing for extremely low slippage trades between assets that are expected to have a stable price relationship, like stablecoins.

As the price deviates from the peg, the curve gradually transitions to a constant product curve, ensuring that liquidity is always available. This model offers the best of both worlds for stablecoin trading: low slippage and deep liquidity.