Interconnected Finance: Ripple's XRPL Blockchain Bridges Cross-Chain DeFi

Ripple’s basic blockchain, XRPL, will unlock loads of DeFi stuff now that they’ve launched their AMM protocol.

Ripple just said they’re launching the XLS-30 AMM protocol, made with the XRPL folks, to help their blockchain system grow.

The AMM will make the DeFi powers of the XRPL system bigger and let DeFi work across 50 blockchains.

XRPL already has a decentralized exchange (DEX) and a regular order book. But it’s missing some cool stuff, such as new DeFi protocols that emerged within the last few years.

A Ripple spokesperson said the AMM sets the stage for more DeFi growth on the XRPL blockchain.

Connecting with cross-chain messaging services like Axelar will make XRPL-based DeFi solutions more useful on many blockchains.

The development of the AMM began in June 2022. David Schwartz, Ripple’s chief technology officer and XRPL co-founder, discussed it in a recent X post.

The AMM wants to add to and make the order book system that XRPL already has bigger. XRPL’s DEX used to only work with order books. However, It allowed a way to trade easily with pairs with lots of money.

AMM Boosts XRPL Liquidity

Moreover, Ripple’s team emphasized that integrating the Automated Market Maker (AMM) with order books enhances and broadens the decentralized exchange (DEX) ecosystem.

According to a spokesperson, merging the AMM with order books enables traders to access the most favourable prices across both systems automatically. At the same time, liquidity providers can generate yield on their surplus liquidity.

The AMM empowers developers to establish liquidity pools for any asset pair issued on XRPL. Ripple clarified that while the AMM isn’t explicitly tailored for institutional trading entities, its features could benefit high-volume traders or firms.

The AMM presently lacks integrated compliance features. However, it complements the established order book DEX, which could be better suited for large financial institutions engaged in high-volume trading of popular tokens,” stated the Ripple representative.

Integrating the AMM with the current order book, DEX aims to create a resilient trading environment catering to a diverse user base, from individual retail traders to institutional players.

It gets that Ripple and XRPL are checking out adding on-chain rules to follow the laws in trying to help big companies start using their system.

However, Ripple’s team sees the AMM’s capability to establish liquidity pools for any asset pair issued on XRPL as pivotal in attracting capital, crypto developers, and traders from various blockchain ecosystems.

The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.