X7 Initial Liquidity Loans help reduce slippage by increasing liquidity

While there are several types of AMM models, the constant product formula is the most widespread one. Since it requires a constant balance between the pair components, a standard AMM is prone to price slippage because of the price impact, which can be affected by the liquidity pool size and the order size. When a trader places a buy or sell order, the AMM algorithm calculates the new price based on the change in the ratio of tokens in the pool. Low liquidity can lead to significant slippage, as large orders tend to cause imbalance.