Invariant Curve Design

Invariant curve design is the mathematical formula that governs how prices are determined in an automated market maker. The most common is the constant product formula, which ensures that the product of the two asset reserves remains constant.

Other designs use different curves to reduce slippage or handle assets with low volatility. The choice of curve significantly impacts the capital efficiency and the user experience of the exchange.

As the field matures, more complex curves are being developed to support various types of assets and trading strategies. It is the foundational physics of decentralized liquidity provision, determining how the protocol reacts to every trade.