With the above definition in mind, Wombat’s invariant curve is defined as follows:
= coverage ratio of token x
= amplification factor
During a swap, the right-hand side of the invariant remains constant.
The invariant has some favorable properties, including:
- The number of assets in a pool is unlimited. One can add and remove assets on the fly.
- The weight of assets is flexible. A protocol can emit more rewards to a token in the pool with higher buy pressure to selectively deepen liquidity.
- Users can provide single-sided liquidity.