Global Equilibrium Coverage Ratio
The system health of a pool could be measured by the global equilibrium coverage ratio
, which is the coverage ratio when all tokens return to the equilibrium state.
By plotting Wombat’s invariant when the amplification factor is 0.05, we can generate the following visualization:
Wombat Invariant (Red curve) and Constant Function Market Makers (blue curve)
When the pool is close to equilibrium, tokens are exchanged in a way similar to CFMM. Unlimited liquidity is provided near the tail when it deviates from equilibrium.