The XRP Ledger (XRPL) has officially activated its Automated Market Maker (AMM) functionality for the Ripple USD (RLUSD) stablecoin. This upgrade went live after achieving over 80% consensus among network validators, marking a significant milestone for decentralized finance (DeFi) on the XRPL platform.
Scheduled activation occurred on Thursday at 7:37 PM UTC. This development enables RLUSD holders to participate in liquidity pools and automated trading strategies directly on the ledger’s native decentralized exchange (DEX).
What Is the XRPL AMM Feature?
Automated Market Makers (AMMs) are decentralized protocols that allow digital assets to be traded without traditional order books. Instead, they use liquidity pools where users contribute assets and earn fees in return.
The XRPL first introduced AMM functionality in March 2024. It allowed liquidity providers to earn yields from various token pools. However, the newly launched RLUSD stablecoin was initially excluded due to its clawback mechanism.
The clawback feature allows token issuers to reclaim assets in cases of illegal activity or regulatory non-compliance. While important for safety, this initially prevented RLUSD from being used in AMM pools.
The AMMClawback Amendment: XLS-73d
To resolve the compatibility issue, the XRPL community introduced and passed the AMMClawback amendment (XLS-73d). This proposal received overwhelming support, with 91.43% of validators voting in favor.
The amendment enables token issuers to claw back assets even when they are locked in AMM liquidity pools. It also prevents unauthorized wallets from depositing paired assets into these pools.
Crucially, the amendment requires that any clawback operation related to AMM pools must use the dedicated AMMClawback function. This ensures both regulatory compliance and seamless DeFi integration.
Benefits for RLUSD and XRP Holders
The activation of the AMM feature for RLUSD is expected to significantly enhance liquidity for both the stablecoin and XRP. It enables the creation of an XRP/RLUSD liquidity pool, making trading more efficient and accessible.
Ripple’s Chief Technology Officer, David Schwartz, previously highlighted that RLUSD could act as a catalyst for improving XRP’s liquidity. This update aligns with that vision, supporting broader adoption and utility.
Liquidity providers can now earn fees by supplying RLUSD and other supported assets to AMM pools. This offers a new source of passive income for token holders and deepens the ledger’s DeFi ecosystem.
For those looking to engage with these new opportunities, you can explore real-time trading tools to optimize your strategy.
Current XRP Market Performance
At the time of writing, XRP is trading near $3.10, reflecting a 24-hour gain of approximately 1.3%. Technical indicators suggest a cautiously optimistic short-term outlook.
The Relative Strength Index (RSI) is at 62.06, indicating moderate bullish momentum without being overbought. The Moving Average Convergence Divergence (MACD) histogram also shows a bullish crossover, supporting the potential for upward movement.
If buying pressure continues, XRP may challenge the nearest resistance level at $3.15. A breakthrough could open a path toward the $3.50 zone. On the downside, key support lies near the $3.00 mark.
Frequently Asked Questions
What is an Automated Market Maker (AMM)?
An Automated Market Maker is a decentralized trading mechanism that replaces traditional order books with liquidity pools. Users contribute assets to these pools and earn a share of the trading fees generated.
Why was RLUSD initially excluded from XRPL AMM pools?
RLUSD includes a clawback feature that allows the issuer to reclaim tokens under specific circumstances. This created technical and regulatory challenges that prevented its inclusion in AMM pools until the AMMClawback amendment was implemented.
How does the AMMClawback feature work?
The AMMClawback function allows issuers to reclaim tokens that are part of an AMM liquidity pool. It ensures compliance without disrupting pool operations or limiting liquidity provision.
What does this update mean for XRP investors?
Improved liquidity and new yield-generating opportunities are among the main benefits. The XRP/RLUSD pool may enhance trading efficiency and offer stronger support for price stability.
Can anyone become a liquidity provider on XRPL?
Yes, any user holding supported assets can contribute to liquidity pools and earn fees. Always assess risks such as impermanent loss before providing liquidity.
Where can I learn more about using AMMs in practice?
For a deeper understanding of liquidity provision and yield farming, you can access advanced DeFi guides tailored to both new and experienced users.
The integration of AMM functionality for RLUSD marks a leap forward for the XRPL ecosystem. It combines regulatory compliance with innovative DeFi mechanics, offering users enhanced utility and liquidity. As the landscape evolves, this upgrade is poised to play a key role in the growth of decentralized trading on the XRP Ledger.