General information

Please look here for detailed information: Technical whitepaper

stabble supports weighted pools and composable stable pools.

To understand the math behind the pools we recommend you to read our technical whitepaper. Further, we designed a tool (coming soon) that aims to support your understanding of the conversation function, spot price, slippage, and divergence loss for weighted and composable pools. It uses live data and helps to test and improve your understanding of our protocol.

Conversation function

A trader interacts with the liquidity pool via the smart contract by adding a supply of a token they wish to sell. Defined by the conversation function of the protocol, the trader receives a deterministically defined amount of a coin they wish to buy. From the point of view of the trader, this procedure is called a swap. Once a miner finds a new block, the swap of the trader is executed. Therefore, the price process follows a discrete path with price changes whenever a trade is executed in the corresponding block.

Spot price

The spot price defines the current price of an asset in exchange for another asset.

Slippage

Xu et al. (2023, p. 238:5) define slippage as the difference between the spot price and the realized price. For stabble constant product AMM, the pool size is inversely related to slippage.

Divergence loss - a risk for liquidity provider

Each liquidity provider owns a percentage share of the overall pool. Since any trading activity changes the pool supplies, the portfolio of provided assets by the liquidity provider can lead to a divergence loss (impermanent loss). In other words, the portfolio of the liquidity provider changes in the way that he owns more of the depreciated asset and less of the appreciated asset.

For more information, please take a look at our technical whitepaper.