Not sure if I have enough understanding to take part of this.
It is possible to have a description slightly less technical than on the Whitepaper ?
Also the reason why a higher focus of liquidity around 1 attracts more trading volume is not obvious to me. Is it possible to elaborate in simple words or is it really that technical ?
As far as I understand, the A parameter affects the shape of this blue curve :
From A = 100 to A = 200 means the blue curve is less flat a the beginning or more flat at the beginning ?
Sorry for those noob questions. I should do my homework but admittedly I am using Curve without fully understanding how it works…
ELI5 what is A Parameter?
So it basically defines how liquidity is going to behave around the peg and how much liquidity there will be when a stable coin goes off its peg.
Those parameters change are highly technical and few fully understand the implications.
So bigger A Parameter ≈ less slippage?
So greater A means the top blue part of the curve is flatter or more curvy ? Not sure if I mistake A = 50 with A = 200
Higher A means the top blue part is flatter. The higher A will allow larger txns without having slippage. The downside of higher A is that if a token goes off peg, you might end up with a very small or large proportion of that token in the pool. This happened in the y pool (A was 2000), where DAI broke its peg upwards, and it only made up about 2-3% of the pool proportion. But if you trust the tokens to maintain their intended peg, higher A attracts more trading volume as there is a wider optimal range where there is basically no slippage
Got it. Totally makes sense to me. Thank you for the explainations.
I think the conversation around this change is too small and the vote too rushed. Whoever is actually the one proposing this should make the case for why this is a good thing.
I’d also love to see the counter-point to the debate. Who does this benefit and who does it hurt? Does this stabilize the protocol or destabilize it?
It seems like the intent is to add return by being able to process larger trades. Is that right?