Ripple’s XRPL blockchain is poised to revolutionize decentralized finance (DeFi) with the introduction of a natively built automated market maker (AMM) protocol.
In collaboration with the XRPL community, Ripple has unveiled the XLS-30 AMM protocol as a new feature to enhance its blockchain ecosystem.
This AMM is expected to expand the DeFi capabilities of the XRPL ecosystem and facilitate cross-chain DeFi applications across 50 different blockchains.
While XRPL’s blockchain ecosystem already has a decentralized exchange (DEX) with a conventional order book, it lacks some of the advanced features that have been pioneered by new DeFi protocols over the past two years.
According to a Ripple spokesperson, the AMM serves as a foundation for further DeFi development on the XRPL blockchain.
By integrating with cross-chain messaging services like Axelar, the XRPL-based DeFi solutions will have broader reach and utility across multiple blockchain ecosystems.
The development of the AMM began in June 2022, as David Schwartz, Ripple’s CTO and XRPL co-founder, mentioned in a recent X post.
The goal of the AMM is to complement and expand upon the existing order book system of XRPL’s DEX. Previously, the DEX operated solely on order books, providing an efficient trading mechanism for highly liquid pairs.
Ripple’s team emphasized that integrating the AMM with order books enhances the existing DEX-powered ecosystem.
Traders can now automatically receive the best price across both systems, while liquidity providers can earn yield on their excess liquidity.
Developers can utilize the AMM to create liquidity pools for any pair of assets issued on XRPL. Ripple clarified that the AMM is not specifically targeted at institutional trading entities, but its functionality may benefit high-volume traders or firms.
While the AMM does not currently have built-in compliance features, it complements the existing order book DEX, which is more suitable for large financial institutions trading popular tokens at high volumes.
The addition of the AMM to the existing order DEX creates a robust trading environment for a wide range of users, from retail traders to institutions.
Ripple and XRPL are also exploring the possibility of incorporating on-chain regulatory compliance features to support institutional adoption of the protocol.
Ripple’s team believes that cross-chain messaging protocols will play a crucial role in attracting capital, crypto developers, and traders from other blockchain ecosystems.