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XRP Ledger Proposes AMM Upgrade to Enhance DeFi Efficiency
XRPL could close its biggest DeFi gap if new AMM amendment passes
Image: Coindesk
A new draft amendment titled 'AMM Swappable Curves' aims to enhance the XRP Ledger's automated market maker by introducing three new curve types. This upgrade is expected to improve capital efficiency for liquidity providers, addressing a significant gap in XRPL's DeFi capabilities as over $3 billion in tokenized assets currently exist on the platform.
- 01The proposed amendment introduces three new curve types: constant product, concentrated liquidity, and StableSwap.
- 02Liquidity providers will have the option to select how their pools price assets, enhancing capital efficiency.
- 03The XRPL currently holds over $3 billion in tokenized real-world assets, highlighting its growing institutional adoption.
- 04The amendment process may take months and is not guaranteed to pass, impacting the timeline for the upgrade.
- 05Existing liquidity pools will remain unaffected, continuing to operate under the current constant product model.
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The XRP Ledger (XRPL) has proposed a significant upgrade to its automated market maker (AMM) system through a draft amendment called 'AMM Swappable Curves.' This initiative aims to introduce three new curve types—constant product, concentrated liquidity, and StableSwap—allowing liquidity providers to optimize how they price assets. This change is particularly crucial as the XRPL currently supports over $3 billion in tokenized real-world assets, including a recent pilot involving Ripple and JPMorgan. The upgrade seeks to address a long-standing gap in XRPL's DeFi offerings, as concentrated liquidity has become a standard feature in major DeFi ecosystems, enhancing capital efficiency. The proposal, authored by XRPL core developers Denis Angell and Roman Thpt, requires a separate amendment vote for activation, which may take several months. Notably, existing liquidity pools will remain unchanged, ensuring a smooth transition for current users. The success of this amendment could significantly influence the XRPL's ability to attract institutional capital and enhance its DeFi capabilities.
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The proposed AMM upgrade could enhance the efficiency of capital deployment in the XRPL ecosystem, potentially attracting more institutional investments.
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