How Does the Pool’s Liquidity Depth Influence the Impact of a Single Trade on the Price Ratio?

Liquidity depth, represented by the size of the reserves (a higher 'k' value), inversely influences the impact of a single trade. In a deep pool, a single trade, even a large one, removes or adds a smaller percentage of the total reserves.

This smaller percentage change results in a smaller shift in the reserve ratio (x/y), leading to less price impact and lower slippage for the trader. Shallow pools experience high price impact from even moderate trades.