Amplification Coefficient

The amplification coefficient (A) in BitFLUX is a key parameter that enhances the liquidity pool's efficiency by adjusting the balance between stable and volatile states.

• The amplification coefficient modifies the StableSwap invariant, balancing between constant sum and constant product behaviors:

$$A \cdot n^{n} \cdot \sum x_{i} + D = A \cdot D \cdot n^{n} + \frac{D^{n+1}}{n^{n} \cdot \prod x_{i}},$$

• This allows the pool to maintain low slippage while providing liquidity, acting like leverage. A higher value of A reduces slippage, making it more stable.