Will This Ripple Update Increase XRP’s Price? CTO Chips In

Rip­ple is push­ing a new upgrade to its XRP Ledger that will intro­duce a cou­ple of very impor­tant fea­tures. In fact, the company’s CTO has, on mul­ti­ple occa­sions, expressed his excite­ment over the upgrade and said that he’s very much look­ing for­ward to it.

But this has also sparked a dis­cus­sion on the impact of the imple­men­ta­tion on XRP’s price. Let’s dive in.

What’s The Fuss All About?

As Cryp­toPota­to report­ed, Rip­ple is about to imple­ment an upgrade to its XRP Ledger that will see the inte­gra­tion of two very impor­tant fea­tures: an auto­mat­ed mar­ket mak­er and a claw­back fea­ture. The first one is of inter­est for this story.

The auto­mat­ed mar­ket mak­er (AMM) will be non-cus­to­di­al and should be inte­grat­ed as a native fea­tured to the DEX “in a way that pro­vides increased returns to those who pro­vide liq­uid­i­ty for the AMM and min­i­mizes the risk of loss­es due to volatility.”

Per the tech­ni­cal spec­i­fi­ca­tions of the upgrade:

XLS-30 will bring a native Auto­mat­ed Mar­ket Mak­er to the XRPL that inte­grates with the exist­ing order book DEX to enable trad­ing of dig­i­tal assets in auto­mat­ed liq­uid­i­ty pools and enable devel­op­ers to address a wider audi­ence of DeFi stake­hold­ers. – reads the announcement.

What About XRP’s Price?

One user asked David Schwartz – the CTO of Rip­ple – whether this could influ­ence Ripple’s price.

When AMM goes live, and a bunch of XRP hold­ers start putting their XRP into pools, and since a lot of us only hold XRP… won’t the price of XRP tank since the AMM will be sell­ing a bunch of XRP to bal­ance the pools out?

To this, Schwartz said:

It’s true that if the AMM draws main­ly from XRP hold­ers, it will be a short-term net increase in sell­ing pres­sure. I doubt that will be sig­nif­i­cant and might be even be out­weighed by peo­ple going in the oth­er direction.

The CTO also said that, in the­o­ry, the AMM should reduce the volatil­i­ty by sell­ing dur­ing price increas­es and buy­ing dur­ing price decreas­es, essen­tial­ly turn­ing volatil­i­ty “into yield.”