Curve V2

work best on stablecoins & tokenised variances of a coin
enables swapping between uncorrelated assets in V2
unlike other AMM, its liquidity pool can supports more than 2 assets, simultaneously LPs are exposed to risk of all tokens in the pool
automatically concentrate liquidity around the current price for LPs to optimise capital efficiency, offer better prices & lower slippage for traders

stablecoin pair like USDT/USDC uses x + y = k
uncorrelated pair like ETH/USDC uses x * y = k
Curve theoretically maintains a balance between 2 equations to fit situations like swapping a high volume, lack of liquidity, unbalance pair liquidity to achieve lower slippage compared with other AMM

to maintain slippage as low as possible, people who provide assets in lower proportion are incentivised
for example, stablecoin pool 3pool contains DAI (35%), USDC (45%), USDT (20%)
if users deposit/sell USDT with the lowest share, they are getting slippage bonus as reward to maintain the pool equilibrium
oppositely, if users deposit/sell USDC with the highest share, they are paying 'rebalancing fee' which is the slippage to maintain the pool equilibrium
arbitrage that makes profits by buying low & selling high within the spread maintain the balance of the pools

Last updated 2 years ago

work best on stablecoins & tokenised variances of a coin
enables swapping between uncorrelated assets in V2
unlike other AMM, its liquidity pool can supports more than 2 assets, simultaneously LPs are exposed to risk of all tokens in the pool
automatically concentrate liquidity around the current price for LPs to optimise capital efficiency, offer better prices & lower slippage for traders

stablecoin pair like USDT/USDC uses x + y = k
uncorrelated pair like ETH/USDC uses x * y = k
Curve theoretically maintains a balance between 2 equations to fit situations like swapping a high volume, lack of liquidity, unbalance pair liquidity to achieve lower slippage compared with other AMM

to maintain slippage as low as possible, people who provide assets in lower proportion are incentivised
for example, stablecoin pool 3pool contains DAI (35%), USDC (45%), USDT (20%)
if users deposit/sell USDT with the lowest share, they are getting slippage bonus as reward to maintain the pool equilibrium
oppositely, if users deposit/sell USDC with the highest share, they are paying 'rebalancing fee' which is the slippage to maintain the pool equilibrium
arbitrage that makes profits by buying low & selling high within the spread maintain the balance of the pools

Last updated 2 years ago