XRP Ledger to Receive Automated Market Maker
The XRP Ledger is set to receive an upgrade that will introduce an automated market maker (AMM) trading platform, allowing $XRP token holders to earn income on-chain. The proposal to introduce it is gaining support from validators.
Support from Validators
The highly-anticipated XLS-30d amendment has seen approval from 20 validators, with data from XRP Ledger explorer XRPScan showing that since the approval another validator has approved the proposal, bringing the consensus to 60%.
What is an AMM?
An AMM is a platform that allows cryptocurrency trading in a permissionless way using liquidity pools, rather than traditional order books, eliminating the need for intermediaries and order books, reducing transaction costs and delays, and enabling high liquidity and low slippage.
Investors and Impermanent Loss
Investors who add tokens to liquidity pools receive a share of the fees collected from each trade, but the revenue comes with the risk of impermanent loss, which occurs when price fluctuations alter the ratio of tokens within the pool but can be restored.
AMM on XRP Ledger
An AMM on the XRP Ledger would mean XRP token holders could earn fees from trades on the AMM and allow users to convert to other assets seamlessly on-chain, significantly boosting the liquidity of XRP itself as liquidity providers earn yield through liquidity pools.
Hot Take: XRP Ledger to Receive Built-in AMM Platform
The XRP Ledger is expected to introduce a built-in automated market maker (AMM) trading platform, offering convenient trading and the opportunity for XRP token holders to earn fees on trades through liquidity pools. With support from validators and the potential to increase the liquidity of XRP, the introduction of an AMM on the XRP Ledger is highly anticipated within the cryptocurrency community.
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