# How Möbius Innovates with ALM?

Unlike traditional AMMs, which define equilibrium as having equal balances of all tokens in a pool, Möbius redefines equilibrium through its Asset Liability Management (ALM) model. In Möbius, equilibrium is achieved when each token in the pool remains solvent, meaning liabilities match assets for every token.

The system incentivizes trades that restore the pool closer to equilibrium by offering more favorable rates, while trades that push the pool further from equilibrium receive less favorable rates. This approach empowers the pool to dynamically adjust to ever-changing market conditions.

For a deeper dive into the pool mechanics, see our Protocol Design page.

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