# Stable Pools Explained

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Last updated

Pools holding assets at the same price are called stable pools. IgniteFi **V2** stable pools are based on solidly maths. A dual-liquidity model is built directly into the **Ignite** core, which supports both stable pools with assets that are correlated with each other as well as volatile pools with uncorrelated assets.

Stable pools concentrate most of their liquidity at current prices, so they use it more efficiently. As trades occur, the pool can adjust the price so as to move the highest liquidity region without incurring losses.

The stable swaps tend to stick to the 1:1 ratio as much as possible until a certain point where they revert to a xyk curve when impossible. To move away from a 1:1 swap ratio, the liquidity ratio spread must be way more pronounced compared to a xyk curve

The process of becoming a liquidity provider in a stable pool is the same as that in a volatile pool. As a liquidity provider in a stable pool, you will gain exposure to all assets in the pool and will incur risk as well.

Calculations are used to maintain the liquidity of the pool at all times using mathematical formulas

x is the amount of the first asset in the pool

y is the amount of the second asset in the pool

k is a fixed value

An illustration of how the stable purple and volatile orange AMM pricing calculations compare is presented below. It shows: