DeFi & Yield

What is a stableswap AMM and why is it used for stablecoins?

A stableswap AMM is an automated market maker designed to trade assets expected to hold near the same value, such as two stablecoins both targeting one dollar. Its pricing curve is flatter than a standard pool around the equal-value point, so large trades move the price very little and keep slippage low. For example, swapping a sizeable amount between two dollar-pegged tokens completes near a one-to-one rate. This design assumes the pegs hold; if one asset loses its peg, the pool can fill with the weaker token. It is widely used because tightly correlated assets need tighter pricing than volatile ones.