How Does a Stablecoin Pool’s Formula Differ from the Constant Product Formula?

Stablecoin pools often use a "stableswap" or hybrid formula, which combines the constant product and constant sum formulas. This results in a much flatter curve around the 1:1 peg, allowing for very low slippage on trades near the peg.

However, as the price diverges significantly from the peg, the curve reverts to the constant product model to ensure deep liquidity, though with higher slippage.