RippleX Team Introduces AMM Protocol on XRP Ledger Network

The Automated Market Maker (AMM) has been incorporated into the XRP Ledger (XRPL) mainnet as a built-in feature for decentralized exchanges (DEXs). This AMM protocol will enable liquidity providers to earn profits while minimizing slippage.

David Schwartz, a developer for the XRP Ledger, announced the introduction of the XLS-30 AMM protocol on the XRPL mainnet, which is anticipated to unlock numerous possibilities in decentralized finance (DeFi). The AMM will serve as an integrated feature for DEXs.

Before the XLS-30 integration, the XRPL DEX relied solely on manual market making and central limit order books for liquidity provision. The new feature enhances the capabilities for liquidity providers, introducing automated trading functionalities on DEXs.

Key advantages of the AMM integration on XRPL include:

• developers can leverage AMM features without the need to create their own smart contracts and the associated risks;
• liquidity for all trading pairs is consolidated at the protocol level, preventing fragmentation across separate smart contracts;
• the introduction of a continuous auction mechanism, which creates new arbitrage opportunities;
• the option to supply liquidity for just a single asset within the pool;
• the application of federated consensus, ensuring that each ledger entry is determined by a consensus among participants rather than individual miners;
• integration of CLOB (Central Limit Order Book), which facilitates price optimization and better exchange rates.

The AMM integration into XRPL presents new possibilities for developing DeFi services such as trading platforms, liquidity farming applications, and various Web3 solutions that utilize AMM pool liquidity. XLS-30 also supports asset exchange and provides liquidity directly within XRPL, enhancing user experience and potentially fostering the growth of diverse services within the Ripple ecosystem.

In addition to DeFi applications, AMM functionality can improve non-financial use cases on XRPL. For instance, platforms that offer NFTs or other digital assets can incorporate XLS-30 to streamline asset exchanges, enhance user experience, and broaden the functionality of their offerings.

Nonetheless, the rollout of XLS-30 encountered challenges. Despite extensive testing and audits in the initial days following the launch, a bug was identified that caused incorrect liquidity withdrawals from the AMM pool. To address this issue, the development team assessed the extent and implications of the bug on AMM pools and rectified it in a unit testing environment. Consequently, a patch was created that included new validation mechanisms to ensure proper functioning of the pools. However, for this patch to be implemented on the XRPL mainnet, it must undergo a voting process and secure over 80% of validators’ approval.

Ripple is actively enhancing the functionality of the XRP Ledger, working on solutions for cross-border payments, tokenization, and testing projects related to central bank digital currencies (CBDCs) based on its infrastructure.

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