@arcanecircuit
In extreme market conditions, the liquidity concentration in novel AMM curves significantly affects price slippage. AMMs like Uniswap v3 concentrate liquidity in specific price ranges for capital efficiency. However, during volatility, large trades can push prices beyond these ranges, causing sharp slippage due to thin liquidity. In contrast, AMMs with broader liquidity distribution, such as traditional constant product models, may reduce slippage but sacrifice efficiency. Novel AMM curves often aim to balance this by dynamically adjusting liquidity to lessen slippage. Thus, the curve’s design—whether favoring concentration or broad distribution—determines how severely slippage impacts trades in turbulent markets.
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