Stable Pools Explained

Pools holding assets that maintain the same price are referred to as stable pools. A dual-liquidity model is built directly into Hercules and is able to support both stable pools with assets that are correlated with each other as well as volatile pools with uncorrelated assets.

Because stable pools concentrate most of their liquidity at current prices, they're able to use it with greater efficiency. This approach enhances trading efficiency by allowing the pool to dynamically adjust prices, thereby shifting the region of highest liquidity without sustaining losses.

stable swaps typically maintain a 1:1 ratio as much as possible until a certain point where they revert to a xyk curve when impossible. To deviate from a 1:1 swap ratio, the liquidity ratio spread must be way more pronounced compared to a xyk curve.

Becoming a liquidity provider in a stable pool is identical to a volatile pool. As a liquidity provider in a stable pool, you will gain exposure to all assets in the pool along with the associated risks.

The calculations that are used to maintain the liquidity of the pool at all times are based on the following mathematical formulas:

  • x is the amount of the first asset in the pool

  • y is the amount of the second asset in the pool

  • k is a fixed value

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