Pool Curves: What to Know Before You Withdraw Tokens

You can withdraw both tokens from a standard constant-product pool in a balanced share if you own liquidity tokens; the pool’s curve limits what can be taken while liquidity remains. That rule also explains why a large swap can return fewer tokens per unit than a small one.

A constant-product curve ties the pool’s two balances together

A common automated market maker (AMM) keeps two token reserves, often written as x and y, near the relationship x × y = k. The value k is the pool invariant: swaps change the reserves, but a swap must leave the product at least as large as before. In many pools, the fee stays in the pool, so the product increases slightly.

The curve sets the exchange rate. If a pool holds 100 AVAX and 10,000 USDC, its starting reserve ratio is 100 USDC per AVAX. That is a spot price implied by the reserves, not a promise that you can trade any amount at that rate.

For a simplified example with no fee, adding 10 AVAX changes the AVAX reserve to 110. To keep the product at 1,000,000, the USDC reserve must fall to about 9,090.91, so the trader receives about 909.09 USDC. The average is about 90.91 USDC per AVAX, below the starting ratio, because each part of the trade pushes the pool farther along the curve.

The curve limits a swap’s output as its size grows

A larger trade takes a bigger step along the curve and causes more price impact: the gap between the starting price and the trade’s average price. The pool’s depth matters. A 10 AVAX trade has more impact in a pool holding 100 AVAX than in an otherwise similar pool holding 1,000 AVAX.

This is why a quoted spot price alone is a poor way to judge a trade. Compare the expected output for your trade size, including the pool’s swap fee and the network transaction cost. Fees vary by pool; network costs vary with network conditions. A decentralized exchange on Avalanche C-Chain, such as the one people reach through Blackhole swap, uses pool liquidity to determine what a swap can return.

Liquidity withdrawals follow a different rule from swaps

Withdrawing liquidity usually means burning liquidity tokens, which represent your share of a pool. In a basic two-token pool, burning 1% of the total liquidity tokens entitles you to roughly 1% of each reserve: in the example pool, that would be 1 AVAX and 100 USDC, before accounting for trades and fees since you added liquidity.

This proportional withdrawal reduces both reserves and the invariant; it does not follow the same rule as a swap. You generally cannot take only the AVAX side while leaving the USDC behind through a standard proportional withdrawal. An attempted one-sided exit has to be handled by a pool or application that supports it, often by swapping part of the withdrawn amount, which adds price impact and may add a fee.

The distinction matters when you provide liquidity. Pool fees may accrue to liquidity providers, but the token amounts you later withdraw depend on the reserves at that time. If traders have moved the pool’s ratio, you may receive a different mix of tokens than you deposited. This change in relative value is called impermanent loss when compared with simply holding the original tokens.

Check the pool and your intended withdrawal before proceeding

For a first transaction, decide whether you mean to swap tokens or withdraw a share of liquidity: they use different mechanics. If you are exploring Avalanche, a wallet such as Core can hold assets and connect to decentralized applications; WalletConnect is another way some wallets connect. Blackhole swap is an Avalanche C-Chain exchange where users can swap tokens or provide liquidity, so the pool’s reserves and curve are relevant to either activity.

Before confirming any transaction, check that the asset and network are the ones you intend to use, and review the estimated token amounts and price impact. An unusually large price impact may mean the pool is shallow for your trade size. For liquidity, consider that withdrawing returns a reserve-based token mix rather than a guaranteed copy of your deposit.

• Choose whether you are swapping or withdrawing liquidity.
• For a swap, compare expected output and price impact for your amount.
• For a withdrawal, check your pool share and the current reserve ratio.
• Confirm the network and the transaction details in your wallet.