Ripple CTO Makes Crucial Statement on Just Launched Ripple’s AMM on XRPL

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Ripple CTO Makes Crucial Statement on Just Launched Ripple's AMM on XRPL
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Rip­ple’s Chief Tech­nol­o­gy Offi­cer David Schwartz has proud­ly announced on the Twitter/X social media net­work that the XLS-30 AMM (auto­mat­ed mar­ket mak­er) that Rip­ple has been work­ing on has been final­ly launched on the XRP Ledger mainnet.

He has also warned users to be care­ful when begin­ning trad­ing via the AMM, shar­ing the nec­es­sary guidance.

Word about AMM on XRP Ledger

In a recent blog arti­cle, Rip­pleX devs have revealed the roll­out of the non-cus­to­di­al XLS-30 AMM into XRP Ledger, boast­ing that from now on the liq­uid­i­ty and trad­ing par­a­digm on the net­work will under­take a dra­mat­ic change.

The AMM was built for the XRPL DEX (decen­tral­ized exchange), and the new inte­gra­tion will allow mak­ing returns for those who add liq­uid­i­ty to the AMM. The auto­mat­ic mar­ket mak­er also pro­vides a decrease in slip­page when traders work with the long tail of tokens. Devel­op­ers will be able to use XLS-30 to inte­grate with the AMM and make their own inter­faces for trad­ing and liq­uid­i­ty provision.

Ripple CTO’s warning to traders

David Schwartz issued a word of cau­tion to traders who intend to use an AMM on the DEX. He stat­ed that should they make a sin­gle-sided deposit into an AMM that has low­er liq­uid­i­ty than the deposit itself, then these traders will take a loss in the deposit process. He also warned that should traders see a large amount of slip­page on the deposit, they should con­sid­er using oth­er options than a sin­gle-sided deposit.

Anoth­er warn­ing made by the Rip­ple CTO says that a trad­er may also suf­fer a loss if their deposit is made into an AMM that was large­ly out of bal­ance before the deposit was made. How­ev­er, Schwartz point­ed out that this should be a rare case since if an AMM stays out of bal­ance for a long time, this means that every­one is miss­ing an oppor­tu­ni­ty to make a profit.

Over­all, accord­ing to Schwartz, the safest option is to deposit equal val­ues of both assets trad­ed by the AMM. If traders decide to use sin­gle-sided deposits after all, the AMMs they use should be “rea­son­ably liq­uid.” The risk of these loss­es should decline, the CTO added, as AMM pools expand and more arbi­trageurs begin to trade against the pools.

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