In an effort to dispel ongoing speculations within the XRP Ledger (XRPL) community, Ripple‘s Chief Technology Officer, David Schwartz, recently provided clarifications regarding the use of XRP and other assets on the soon-to-launch XRPL Automated Market Maker (AMM). With the AMM feature poised to go live in a matter of days, the XRPL community has been abuzz with discussions. These discussions often revolve around the functionality and features of the AMM, leading to various speculations, notably on whether the AMM would solely support XRP pools.
Responding to a community member’s inquiry on X, formerly known as Twitter, Schwartz confirmed that the upcoming AMM would indeed support a multitude of cryptocurrencies, not just XRP. This response comes amidst rising uncertainties, primarily because many reports have predominantly focused on XRP. Publications like The Crypto Basic have emphasized the potential benefits for XRP holders, particularly in terms of earning passive income through liquidity pools on the AMM. However, there has been less discourse regarding the inclusion of other assets, which contributed to the speculation that the AMM feature might be exclusive to XRP.
The scope of XRPL AMM’s asset support
According to Schwartz, the XRPL AMM is designed to facilitate any AMM instance involving two crypto assets supported by the XRP Ledger. This opens the door for a wide array of asset pairs, such as CORE/XRP, FURY/USD, and CSC/RPR, provided both assets are compatible with the XRPL. The Ripple CTO’s clarification aims to broaden the understanding of the AMM’s capabilities, highlighting its inclusivity beyond just XRP.
Despite this flexibility, Schwartz anticipates that XRP will dominate the AMM pools. He attributes this expectation to XRP’s leading position within the network and its role as the gas token. This dominance is anticipated despite the liberty afforded to market participants to engage in trades with various other assets. There has also been speculation about Ripple using some of its escrowed XRP to enhance liquidity in the AMM pools. However, Schwartz has dismissed this idea, suggesting it could create selling pressure on the asset.
Market reactions and implementation timeline
The implementation date for the AMM functionality is set for March 22, following its approval by the minimum required consensus among validators on March 15. The introduction of the AMM feature is a significant milestone for the XRPL, expected to impact the network and its assets. Some community members, including on-chain analyst Mr. Huber, speculate that the feature’s launch could influence XRP’s price, drawing parallels with historical precedents from similar implementations on other networks.
In anticipation of the AMM feature, stakeholders within the XRPL community are keenly observing the developments. The broadened support for multiple assets highlights the XRPL’s commitment to fostering an inclusive and versatile ecosystem. As the launch date approaches, the community remains watchful of the potential shifts in market dynamics and the role of XRP within the new AMM framework.
