The upcoming Automated Market Maker (AMM) feature on the XRP Ledger (XRPL) has stirred discussions and debates within the XRP community, particularly concerning its potential influence on XRP’s price stability.
Expectations were high among community members that the AMM would significantly reduce XRP’s price volatility. However, Ripple’s Chief Technology Officer, David Schwartz, recently shared a more tempered perspective.
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While recognizing the potential for the AMM to affect existing trading strategies, Schwartz emphasized the emergence of new opportunities such as arbitrage and continuous auction participation. He also mentioned volatility harvesting as a strategy that could potentially mitigate price fluctuations.
Despite these new strategies, Schwartz indicated that the immediate impact of the AMM on XRP’s price volatility is likely to be limited. He pointed out the relatively modest trading activity on the XRPL Decentralized Exchange (DEX) compared to the substantial volume on centralized exchanges and other platforms, likening it to a small drop in the vast ocean of XRP trading.
Schwartz’s remarks coincide with ongoing discussions about recent price movements in XRP. Some community members have noted a lack of significant volatility, even drawing parallels to stablecoins, despite an overall market upswing.
Over the past 30 days, XRP has experienced a modest 1.24% increase in price, contrasting with the notable surges seen in leading cryptocurrencies like Bitcoin and Ethereum.
Read Also: Ripple CTO Reveals How XRP Holders Can Earn Passive Income With XRP
These observations have sparked unverified speculations about Ripple potentially employing measures to stabilize XRP’s price. The impending launch of the AMM has further fueled concerns about reduced volatility, prompting Schwartz to clarify the situation.
While the introduction of the AMM may bring forth new trading avenues and strategies, its immediate impact on XRP’s price volatility will be minimal due to the XRPL DEX’s relatively smaller size compared to broader XRP trading platforms. As the AMM rolls out and evolves, monitoring its actual effects on XRP and its broader implications for the XRPL ecosystem will be essential.
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