How Do Stablecoin Pools Minimize the Risk of Impermanent Loss? ▴ Learn

How Do Stablecoin Pools Minimize the Risk of Impermanent Loss?

Stablecoin pools, which contain assets pegged to the same value (e.g. USD), use a different AMM curve that is optimized for assets that should trade near a 1:1 ratio.

Because the price ratio between the two stablecoins is expected to remain constant, the risk of divergence that causes impermanent loss is significantly reduced. This makes them highly capital efficient.

What Is the Risk Associated with Impermanent Loss in Decentralized Finance (DeFi) Liquidity Pools?

Explain the Difference between a Constant Product and a Constant Sum AMM Curve

How Does a ‘Hybrid AMM’ (Like Curve’s Stableswap) Combine Features of Constant Product and Constant Sum?

Why Is Impermanent Loss Generally Lower for Stablecoin Pairs in an AMM?