The XRP Ledger (XRPL) is on the brink of a significant evolution, with the XLS-30 AMM amendment now open for voting on the mainnet. Ripple CTO Schwartz has expressed his enthusiasm for this feature, retweeting RippleX’s announcement and commenting, “One of my favorite XRPL features ever, explained in my keynote at Apex Development Summit, is now open for voting on mainnet.”
Amendments on the XRPL, such as the XLS-30, represent foundational changes or new features related to transaction processing. The XRPL’s amendment system employs a rigorous consensus process, ensuring that any changes impacting transaction processing receive widespread approval. For an amendment to be permanently integrated, it must secure over 80% support from the community for a continuous two-week period.
What Ripple CTO Schwartz’s Fave Update Delivers
The XLS-30 AMM amendment, as detailed by RippleX, is a new feature for the XRP Ledger. Its introduction aims to bring native Automated Market Maker (AMM) functionality, enabling the trading of assets within automated liquidity pools. According to the developer arm of Ripple Labs, this amendment stands out due to its novel Continuous Auction Mechanism, designed to incentivize arbitrageurs to bid for mispricing opportunities.
This mechanism promises to significantly mitigate the effects of impermanent loss for liquidity providers (LPs). RippleX emphasized the transformative potential of this feature, stating, “All of these unique features, combined with the XRPL’s low fees and fast finality, bring XLS-30 to the cutting edge of decentralized financial applications.”
A deeper dive into the GitHub description for “0030 XLS 30d: Automated Market Maker on XRPL” provides further details about the proposal’s features and objectives. Historically, the XRPL decentralized exchange (DeX) has depended on manual market making and order books for liquidity.
The XLS-30 seeks to revolutionize this by introducing a non-custodial AMM as an inherent feature. This mechanism is designed to amplify returns for those providing liquidity while concurrently minimizing potential losses due to market volatility.
A unique facet of this AMM instance is its continuous auctioning of trading advantages to arbitrageurs. The fees collected from these auctions are then redistributed to its liquidity providers, ensuring a more equitable distribution of profits.
Proposed last year, the protocol-native AMM is envisioned to seamlessly integrate with the order book-based DEX on the XRP Ledger. Since its devnet debut in November 2022, there has been a flurry of activity, with hundreds of AMM pools being established and a multitude of wallets connected for testing.
RippleX has also been proactive, incorporating AMM support in three client libraries, namely xrpl.js, xrpl-py, and xrpl4j, and integrating it into the xrpl.org explorer.
At press time, XRP traded at $0.5044.
Featured image from VOI, chart from TradingView.com