April 19, 2024
Ripple's XRPL Blockchain Integrates with Cross-Chain DeFi
Latest Cryptocurrency News

Ripple’s XRPL Blockchain Integrates with Cross-Chain DeFi

Ripple’s XRPL blockchain is poised to revolutionize decentralized finance (DeFi) with the introduction of a native automated market maker (AMM) protocol. The recently unveiled XLS-30 AMM protocol, developed in collaboration with the XRPL community, aims to enrich the blockchain ecosystem.

Expanding DeFi Capabilities Across Blockchain Ecosystems

The XLS-30 AMM protocol is anticipated to broaden the DeFi landscape within the XRPL ecosystem, facilitating cross-chain DeFi applications spanning 50 different blockchains. This innovation comes in response to the limitations of XRPL’s existing decentralized exchange (DEX), which relies on conventional order book mechanisms lacking the advanced features characteristic of contemporary DeFi protocols.

Ripple’s spokesperson highlighted the significance of the AMM in paving the way for further DeFi advancements on the XRPL blockchain. Integration with cross-chain messaging services such as Axelar is set to enhance the accessibility and functionality of XRPL-based DeFi solutions, extending their reach across diverse blockchain ecosystems.

AMM Protocol Development and Functionality

The development of the XLS-30 AMM protocol commenced in June 2022, as noted by Ripple’s chief technology officer and XRPL co-founder, David Schwartz. Designed to complement and augment XRPL’s existing order book system, the AMM offers a seamless trading experience for users. By integrating the AMM with the order book mechanism, traders can effortlessly access the best prices across both systems, while liquidity providers have the opportunity to earn yield on their surplus liquidity.

Source: David Schwartz

Ripple emphasized that the AMM’s versatility enables developers to establish liquidity pools for any pair of assets issued on XRPL. Although initially not tailored for institutional trading entities, the AMM’s functionalities may prove beneficial for high-volume traders or firms seeking efficient trading mechanisms.

While the AMM lacks built-in compliance features, it synergizes with XRPL’s order book DEX, which is better suited for large financial institutions engaged in high-volume trading activities. Incorporating the AMM into the existing DEX infrastructure is expected to create a robust trading environment catering to a diverse range of users, from retail traders to institutional investors.

Furthermore, Ripple and XRPL are exploring the incorporation of on-chain regulatory compliance features to facilitate institutional adoption of the protocol. The integration of cross-chain messaging protocols is anticipated to play a pivotal role in attracting capital, crypto developers, and traders from various blockchain ecosystems, bolstering XRPL’s position in the DeFi landscape.

Image by Reto Scheiwiller from Pixabay

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