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  1. USDFI AMM
  2. Understanding Automated Market Makers

vAMM vs sAMM

1) Variable pools (vAMM) are a type of pool that are intended for use with assets that have a high degree of price volatility. These pools utilize a generic constant product market maker formula, which is represented by the equation:

x×y≥k x × y ≥ kx×y≥k

This formula is used to determine the value of assets within the pool, taking into account their volatility. The standard fee for this liquidity pool type is 0.30%.

2) Stable pools (sAMM) are a type of liquidity pool that are intended for use with assets that have minimal to no volatility in reference to a specific asset price. This means that the formula used to determine the value of the assets within the pool is able to maintain low slippage, even when large trade volumes are present. The formula used in these pools is represented as

x3y+y3x≥kx³y + y³x ≥ kx3y+y3x≥k

The standard fee for this liquidity pool type is 0.04%.

The mathematical formulas used in both pools are implemented to maintain a balanced total pool liquidity at all times.

PreviousUnderstanding liquidity poolsNextUnderstanding AMM users

Last updated 2 years ago