Reserve of Token Y (USDC) ^ | \ | \ x * y = k (Constant Product Invariant) | \ | \ | \ <-- Initial State (x1, y1) | \ | \ Trade: +Δx of Token X | \ New State: (x1 + Δx, y1 - Δy) | \ | \ | \ | \ | \ | \ |_______________\________________________> Reserve of Token X (ETH) x1 x1 + Δx * As Reserve X increases, Reserve Y decreases. * The slope of the curve (-y/x) represents the marginal price. * The curve is convex, meaning large trades experience exponential slippage.