Weighted Pools

A Flexible AMM Solution

Overview

Weighted Pools are a sophisticated iteration of the traditional x*y = k AMM model first popularized by Uniswap V1. They utilize Weighted Math, making them ideal for a broad spectrum of scenarios, even those involving tokens without any inherent price correlation, like USDC/dETH. In a deviation from typical AMMs that rigidly offer 50/50 weightings, JellySwap's Weighted Pools grant users the flexibility to create pools with multiple tokens and personalized weightings, including configurations such as 80/20 or 60/20/20.

Key Benefits

• Custom Exposure: Weighted Pools empower users with the option to determine their exposure levels to distinct assets, without compromising on their liquidity provision capabilities. The weight accorded to a token in a pool conversely determines the volatile loss it could suffer in the event of a price fluctuation.

• Tackling Impermanent Loss: Impermanent Loss represents the value differential between simply holding a collection of assets versus offering liquidity for those assets.

  Pools that emphasize one token substantially over another could significantly reduce but also increase impermanent loss, depending on what direction the higher weighted token moves. This however, adds other side effects as well; highly asymmetrical pools can lead to increased slippage during swaps, given the liquidity discrepancy on one side. The 80/20 pool configuration is often seen as a balanced approach, striking the right balance between liquidity provision and impermanent loss limitation.