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What Are the Trade-Offs between a Constant Product Market Maker and a Constant Sum Market Maker (X+y=k)?

CPMM offers infinite liquidity with high IL; CSMM offers low IL and slippage for 1:1 pairs but risks being drained if the peg breaks.
Greeks.Live21.11.25

What Are the Trade-Offs between a Constant Product Market Maker and a Constant Sum Market Maker (X+y=k)?

The Constant Product Market Maker (CPMM) offers infinite liquidity, ensuring trades can always occur, but at the cost of higher impermanent loss and higher slippage for large trades in smaller pools. The Constant Sum Market Maker (CSMM) offers zero slippage and virtually no impermanent loss when the assets maintain a 1:1 ratio, making it highly capital efficient for stablecoins.

However, the CSMM is susceptible to being completely drained of one asset if the price peg breaks, making it unsuitable for volatile pairs.

How Does a Stablecoin Pool (Like a Constant Sum Market Maker) Manage the ‘K’ Value Differently?
What Is a ‘Hybrid’ AMM and How Does It Combine the Features of CPMM and CSMM?
How Does the ‘Constant Sum’ Formula Differ from the ‘Constant Product’ Formula in AMMs?
Why Is the Constant Sum Model Susceptible to Being Fully Drained When the Price Peg Fails?

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