Ripple’s underlying blockchain, XRPL, aims to unlock a wide range of decentralized finance (DeFi) opportunities following the launch of its own Automated Market Maker (AMM) protocol.
Ripple recently announced the release of the XLS-30 AMM protocol, developed in collaboration with the XRPL community. The AMM functionality is expected to benefit the XRPL blockchain ecosystem and provide cross-chain DeFi options across 50 blockchains.
1/ The XLS-30 AMM is now live on #XRPLedger!
XLS-30 is an evolution of XRPL’s native DEX, introducing a first-of-its-kind approach to on-chain market-making and liquidity. Learn more here: https://t.co/boW1wX0GDi
— RippleX (@RippleXDev) March 22, 2024
While the XRPL blockchain already hosts a decentralized exchange (DEX) with a traditional order book, it lacks some advanced features introduced by new DeFi protocols over the past two years.
A representative from Ripple stated that the AMM lays the foundation for further DeFi development on the XRPL blockchain. Integration with cross-chain messaging services like Axelar (AXL) will expand the coverage and utility of XRPL-based DeFi solutions across multiple blockchain ecosystems.
Development of the AMM began in June 2022, as noted in a recent X post by Ripple’s Chief Technology Officer and XRPL co-founder, David Schwartz.
After ~2 years, the day has finally arrived – the AMM is live on XRPL mainnet! Thus begins a longer road from today’s initial rollout to future growth milestones for users, traders, devs, market makers and many more. Looking forward to the journey alongside all of you in the XRPL… https://t.co/JZjxloxo06
— David "JoelKatz" Schwartz (@JoelKatz) March 22, 2024
The AMM aims to complement and expand the existing order book system on XRPL. Previously, the XRPL DEX solely relied on order books, providing an efficient trading mechanism for highly liquid pairs.
Ripple’s team highlighted that integrating the AMM with order books enhances and extends the existing DEX-based ecosystem.
“By integrating AMM with order books, traders can automatically get the best price in both systems, while liquidity providers can earn income from excess liquidity,” added the representative.
The AMM allows developers to create liquidity pools for any asset pair issued on XRPL. Ripple also confirmed that while the AMM is not specifically designed for institutional trading firms, its functionality may prove useful for large traders or firms.
“While AMM currently lacks built-in compliance features, it complements the existing DEX order book, which may be more suitable for large financial institutions trading popular tokens in large volumes,” said the Ripple representative.
The addition of AMM to the existing order book-based DEX aims to provide a reliable trading environment for a wide range of users, from retail traders to institutions.
Ripple and XRPL are exploring the possibility of incorporating compliance features into the blockchain to support institutional adoption of their protocol.
AMM enables developers to create liquidity pools for any asset pair issued on XRPL. Ripple believes that cross-chain messaging protocols will be crucial for attracting capital, cryptocurrency developers, and traders from other blockchain ecosystems.
