What Are ‘Stableswaps’ and How Do They Modify the Constant Product Formula for Pegged Assets?

Stableswaps are specialized AMM pools designed for assets that should maintain a near-constant peg, such as stablecoins (e.g. USDC/DAI).

They use a hybrid curve, often a combination of the constant product (x y=k) and constant sum (x+y=k) formulas. This modification allows for extremely low slippage around the peg (like constant sum) but maintains liquidity depth even if the peg breaks (like constant product), ensuring capital efficiency for stablecoin trades.