The curve is nearly flat around the 1:1 point and bends towards constant-product behaviour at the extremes. Swapping millions between two dollar stablecoins can cost a few basis points, which is why these pools carry most stablecoin and wrapped-token volume.
That flatness makes pool balance an early warning system. Because prices barely move while reserves stay reasonable, a pool that has drifted to 80/20 is telling you the market is quietly selling one side well before the printed price shows a depeg. Watching pool composition has repeatedly front-run headline depegs.
Liquidity providers here take a specific shape of risk: many small fees in calm conditions, then being left holding almost entirely the broken asset if one side fails. It is closer to writing insurance than to market making.
Related: depeg, amm, liquidity-pool, impermanent-loss