The Automated Market Maker (AMM) was integrated into the XRP Ledger (XRPL) mainnet as an embedded feature for DEXs. The AMM protocol will allow liquidity providers to profit and reduce slippage.
David Schwartz, XRP Ledger Developer, revealed the launch of the XLS-30 AMM protocol on the XRPL mainnet, which is set to unlock a wide range of opportunities in decentralized finance (DeFi). AMM will function as an embedded feature for DEXs.
Prior to the integration of XLS-30, the XRPL DEX provided liquidity exclusively through manual market making and central limit order books. The new feature offers enhanced capabilities for liquidity providers, adding functionality for automated trading on DEXs.
Among the key benefits of the AMM integration on XRPL are:
- developers can utilize AMM functionality without creating their own smart contracts and facing associated risks;
- liquidity for all trading pairs is aggregated at the protocol level, eliminating the possibility of fragmentation across individual smart contracts;
- the implementation of a continuous auction mechanism, which opens up new arbitrage opportunities;
- the ability to provide liquidity for only a single asset in the pool;
- the use of federated consensus, so that each ledger record is determined by a consensus of participants rather than by individual miners;
- CLOB (Central Limit Order Book) integration, which enables price optimization, providing better exchange rates.
The AMM integration into XRPL offers new opportunities to create DeFi services such as trading platforms, liquidity farming applications, and other Web3 solutions that utilize liquidity of AMM pools. XLS-30 also enables asset exchange and provides liquidity directly within XRPL, which improves user experience and can drive the development of various services in the Ripple ecosystem.
Beyond DeFi applications, AMM functionality can enhance non-financial XRPL use cases. For example, platforms offering NFTs or other digital goods can integrate XLS-30 to facilitate asset exchange, improve user experience, and extend the functionality of offerings.
However, the launch of XLS-30 didn’t go smoothly. Despite numerous rounds of testing and audits in the first days after the launch, a bug was discovered that led to incorrect withdrawal of liquidity from the AMM pool. To resolve the issue, the dev team analyzed the scope and impact of the bug on AMM pools and fixed it in a unit testing environment. As a result, a patch was developed that included new validation mechanisms to ensure that the pools were working properly. But to implement it on the XRPL mainnet, the patch is required to pass the voting process and receive more than 80% of validators’ votes.
Ripple is actively expanding XRP Ledger’s functionality, developing solutions for cross-border payments, tokenization, and testing CBDCs projects on its basis.
