Liquidity Pools

Liquidity Pools are the lifeblood of the KuSwap DEX, enabling users to swap tokens in a secure, permissionless, and decentralized environment, with very low fees and low slippage.

SLIPPAGE

Slippage is the difference between the current market price of the asset being traded and the price at which the trades are executed. Slippage is inherent on constant function market makers such as KuSwap. Lower slippage equates to a more accurate trade price execution.

In order for KuSwap to be able to cater to every type of liqudity, we have implemented 2 types of liquidity pools: Stable and Volatile.

Stable Pools

Stable pools are for assets that have little or negligible volatility, such as stable coins. It is essential that the formula for the trade execution in these pools are different from the volatile pools in order to allow for very low slippage, even in the cases where very high volume of trades happen.

The formula that KuSwap uses for stable pools is:

$$x³y + y³x ≥ k$$

Volatile Pools

Volatile pools, as the name suggests, are for assets that can experience high levels of volatility from time to time. These pools use the generic formula of AMMs:

$$x × y ≥ k$$

Fees Structure

The following fee structure is applicable for various trading pairs:

• For stablecoin pools, a nominal fee of 0.03% is charged on each trade.

• For volatile asset pairs, the trading fee is set at 0.3%.

These fees are retained in the native tokens involved in the respective trade (e.g., trading between KUSv3 and KCS will result in fees stored in KUSv3 and KCS).

Please note, the maximum trading fee that can be applied across all pairs is capped at 0.5%, offering a secure trading environment.