Wave Currently looking at adding AMM facility to its network. According to a release from Github, discussions are underway on the 0030 XLS-30d proposal that seeks to introduce Automated Market Makers (AMMs) in the XRPL blockchain. It is believed that the network has immense potential in this.
Yields, Liquidity Pools, Liquidity Tokens! – XLS-30d Discussion for One #XRPL The network of Automated Market Maker (AMM) has immense potential. what is this trying to understand #WaveK David Schwartz called XRPL AMM’s “Secret Sauce”.— RathofKahneman (@WKahneman) 3 July 2022
In 13 tweets. pic.twitter.com/fuAT6vg7my
Automated Market Makers (AMMs) enable crypto assets to be traded without permission and without a traditional order book. Trading takes place automatically using a pool of available tokens referred to as a liquidity pool.
At the moment, the XRPL decentralized exchange (DEX) only provides liquidity through manual market making and order books. The XLS-30d offer seeks to introduce a non-custodial Automated Market Maker (AMM) as a core feature of the XRPL DeX, providing maximum returns for those who supply liquidity and volatility to the AMM reduce the risk of damage.
How Ripple Wants to Differ
Not all AMMs are created equal, and different techniques have different trade-offs. Compared to Uniswap, Ripple treats Geometric Mean Market Makers (GM3) as a native XRPL feature. In order to generate liquidity automatically, GM3 algorithmically determines a fair exchange price that is stabilized through arbitrage.
On XRPL, it will provide a liquidity pool between XRP and the issued assets as well as any two issued assets. The AMM DX is kept in a stable position with respect to external markets, thanks in large part to intermediaries.
Hey, what’s this trying to fly under the radar? https://t.co/xJ16fviQnM— (@JoelKatz) 1 July 2022
Although AMM has its own arbitrage risks and problems, Ripple CTO Joel Katzo says that the planned XRPL will be a “secret sauce” in the AMM, a continuous auction mechanism that encourages arbitrageurs to burn liquidity tokens more quickly and repeatedly in order to increase profits to liquidity providers.