How Does a Stablecoin Pool (Like a Constant Sum Market Maker) Manage the 'K' Value Differently? ▴ Learn

How Does a Stablecoin Pool (Like a Constant Sum Market Maker) Manage the ‘K’ Value Differently?

A Constant Sum Market Maker (CSMM) uses x + y = k. In this model, 'k' is the sum of the reserves, and the price remains near 1:1 until one reserve is nearly depleted.

More advanced stablecoin AMMs, like Curve, use a hybrid function that combines the CSMM near the peg for low slippage and the CPMM at the extremes to ensure deep liquidity and prevent full depletion. This hybrid approach effectively manages 'k' to keep the price stable.

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