Ripple’s XRPL Blockchain Expands Cross-Chain DeFi Integration

Ripple’s XRPL blockchain is poised to unlock a plethora of decentralized finance (DeFi) capabilities with the introduction of its new automated market maker (AMM) protocol. Recently unveiled, the XLS-30 AMM protocol, developed collaboratively with the XRPL community, is set to enrich Ripple’s blockchain ecosystem.

This AMM is anticipated to broaden the DeFi horizons within the XRPL ecosystem, facilitating cross-chain DeFi applications across a spectrum of 50 blockchains. While XRPL’s decentralized exchange (DEX) currently operates with a conventional order book, it lacks some of the advanced features pioneered by recent DeFi protocols.

According to a spokesperson from Ripple, the AMM serves as a cornerstone for further DeFi advancements on the XRPL blockchain. Integration with cross-chain messaging services like Axelar is expected to enhance the accessibility and functionality of XRPL-based DeFi solutions across multiple blockchain ecosystems. The development of the AMM, which commenced in June 2022, was reflected upon by Ripple CTO and XRPL co-founder David Schwartz in a recent post.

After ~2 years, the day has finally arrived – the AMM is live on XRPL mainnet! Thus begins a longer road from today’s initial rollout to future growth milestones for users, traders, devs, market makers and many more. Looking forward to the journey alongside all of you in the XRPL… https://t.co/JZjxloxo06

— David "JoelKatz" Schwartz (@JoelKatz) March 22, 2024

The AMM aims to complement and augment XRPL’s existing order book system. Previously, XRPL’s DEX solely relied on order books, offering a capital-efficient trading mechanism for highly liquid pairs.

Ripple’s team highlights that integrating the AMM with order books extends and enhances the existing DEX-powered ecosystem.

“By integrating the AMM with order books, traders can automatically access the best price across both systems, while liquidity providers can generate yield on their excess liquidity,” the spokesperson elaborated.

Developers can utilize the AMM to create liquidity pools for any asset pair issued on XRPL. While the AMM isn’t tailored explicitly for institutional trading entities, its functionality may prove beneficial for high-volume traders or firms.

Although the AMM currently lacks built-in compliance features, it complements the existing order book DEX, which may cater more to large financial institutions trading popular tokens at scale.

The integration of the AMM with the existing order DEX is expected to foster a robust trading environment suitable for a diverse user base, ranging from retail traders to institutions.

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Ripple and XRPL are also exploring the inclusion of on-chain regulatory compliance features to facilitate institutional adoption of their protocol.

The AMM, coupled with cross-chain messaging protocols, is envisioned by Ripple’s team as instrumental in attracting capital, crypto developers, and traders from various blockchain ecosystems.