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Market

Ripple Wants To Use Uniswap-Like AMM To Bring Massive DeFi Potential To XRPL

July 4, 2022 - Around 2 mins mins to read

Ripple is debating including AMM functionality in its network. A Github announcement states that the 0030 XLS-30d proposal, which aims to bring Automated Market Maker (AMM) to the XRPL network, is still under consideration. The network is seen to stand to gain a great deal from this.

Ripple Wants To Use Uniswap-Like AMM To Bring Massive DeFi Potential To XRPL
Ripple Wants To Use Uniswap-Like AMM To Bring Massive DeFi Potential To XRPL

Cryptocurrency assets can now be traded without authorization or traditional order books thanks to automated market makers (AMMs). Using pools of accessible tokens referred to as liquidity pools, trading happens automatically.

Only manual market making and order books are being used to provide liquidity on the XRPL decentralized exchange (DeX). In order to maximize earnings for those who provide liquidity for the AMM and minimize the danger of losses brought on by volatility, the XLS-30d proposal intends to implement a noncustodial automated market maker (AMM) as a native feature to the XRPL DeX.

How Ripple aims to be unique?

Ripple Wants To Use Uniswap-Like AMM To Bring Massive DeFi Potential To XRPL
Ripple Wants To Use Uniswap-Like AMM To Bring Massive DeFi Potential To XRPL

AMMs vary, and different approaches have distinct trade-offs. Ripple views geometric mean market makers (GM3) as a native XRPL functionality as opposed to Uniswap. The GM3 algorithm calculates an arbitrage-stabilized fair exchange value to produce liquidity automatically.

This would offer liquidity pools on XRPL between any two issued assets as well as between XRP and the assets themselves. In great part because of arbitrageurs, the AMM DeX is kept in a constant state in reference to foreign markets.

AMMs have their own arbitrage risk and issues, but according to Ripple CTO Joel Katz, the XRPL AMM would feature a “special sauce” that would incentivize arbitrageurs to burn liquidity tokens more frequently and quickly in order to increase the benefits to liquidity providers.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Annie

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AMM

AMMs

Decentralized Exchange

Dex

foreign market

Joel Katz

Network

Ripple

Ripple CTO

Uniswap

XRPL

XRPL DeX

Author

Annie

Championing positive change through finance, I've dedicated over eight years to sustainability and environmental journalism. My passion lies in uncovering companies that make a real difference in the world and guiding investors towards them. My expertise lies in navigating the world of sustainable investing, analyzing ESG (Environmental, Social, and Governance) criteria, and exploring the exciting field of impact investing. "Invest in a better future," I often say. That's the driving force behind my work at Coincu – to empower readers with knowledge and insights to make investment decisions that create a positive impact.
Market

Ripple Wants To Use Uniswap-Like AMM To Bring Massive DeFi Potential To XRPL

Ripple is debating including AMM functionality in its network. A Github announcement states that the 0030 XLS-30d proposal, which aims to bring Automated Market Maker (AMM) to the XRPL network, is still under consideration. The network is seen to stand to gain a great deal from this.

Ripple Wants To Use Uniswap-Like AMM To Bring Massive DeFi Potential To XRPL
Ripple Wants To Use Uniswap-Like AMM To Bring Massive DeFi Potential To XRPL

Cryptocurrency assets can now be traded without authorization or traditional order books thanks to automated market makers (AMMs). Using pools of accessible tokens referred to as liquidity pools, trading happens automatically.

Only manual market making and order books are being used to provide liquidity on the XRPL decentralized exchange (DeX). In order to maximize earnings for those who provide liquidity for the AMM and minimize the danger of losses brought on by volatility, the XLS-30d proposal intends to implement a noncustodial automated market maker (AMM) as a native feature to the XRPL DeX.

How Ripple aims to be unique?

Ripple Wants To Use Uniswap-Like AMM To Bring Massive DeFi Potential To XRPL
Ripple Wants To Use Uniswap-Like AMM To Bring Massive DeFi Potential To XRPL

AMMs vary, and different approaches have distinct trade-offs. Ripple views geometric mean market makers (GM3) as a native XRPL functionality as opposed to Uniswap. The GM3 algorithm calculates an arbitrage-stabilized fair exchange value to produce liquidity automatically.

This would offer liquidity pools on XRPL between any two issued assets as well as between XRP and the assets themselves. In great part because of arbitrageurs, the AMM DeX is kept in a constant state in reference to foreign markets.

AMMs have their own arbitrage risk and issues, but according to Ripple CTO Joel Katz, the XRPL AMM would feature a “special sauce” that would incentivize arbitrageurs to burn liquidity tokens more frequently and quickly in order to increase the benefits to liquidity providers.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Join CoinCu Telegram to keep track of news: https://t.me/coincunews

Follow CoinCu Youtube Channel | Follow CoinCu Facebook page

Annie

CoinCu News