Why Do Stablecoin-to-Stablecoin Pools Typically Use a Different AMM Formula than X Y=k?

Stablecoin pools use specialized formulas, such as those that blend Constant Product and Constant Sum, to maximize capital efficiency and minimize slippage. The x y=k formula has a curved price graph that leads to high slippage near the 1:1 price point unless the reserves are enormous.

Since stablecoins are expected to trade near 1:1, a flatter curve (like x+y=k or a hybrid) is needed to allow large trades with minimal price impact, maximizing capital efficiency in the desired range.