XRP Ledger (XRPL) is set to introduce a native automated market maker (AMM) that could revolutionize the way XRP holders interact with the network. The highly anticipated XLS-30D amendment holds the potential to unlock passive income opportunities for the XRP community.
Welcoming the XRPL’s Native Automated Market Maker
Decentralized exchanges (DEXs) have gained significant traction in the cryptocurrency world, offering users the ability to trade assets without relying on a traditional buyer-seller marketplace. The upcoming XLS-30D amendment is poised to elevate the XRPL’s capabilities by integrating its very own AMM.
An AMM operates by utilizing a liquidity pool, a collection of tokens provided by users who act as liquidity providers (LPs). The token prices within the liquidity pool are governed by a mathematical formula. Additionally, a trade fee is imposed, with a portion of the fee distributed to the liquidity providers.
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How XRP Community Benefits
The introduction of the XRPL’s native AMM holds immense advantages for the XRP community. Apart from bolstering the liquidity of XRP and other assets, the AMM will offer a wide range of trading pairs, allowing users to explore diverse investment options. Furthermore, this development opens up the potential for users to generate passive income.
Recently, Panos Mekras, a renowned figure within the XRP community and a financial consultant highlighted the AMM’s significance. Mekras emphasized that the introduction of the native AMM would give XRP holders the opportunity to earn on the XRPL for the first time.
If passed, $XRP holders will be able to earn, for the first time, income on-chain. #XLS30 #AMM https://t.co/nSiNHU2R1g
— Panos 🔺 {X} 🪝 (@panosmek) August 27, 2023
As liquidity providers (LPs) on the XRPL’s upcoming native AMM, community members can contribute tokens to liquidity pools and receive LPTokens in return. LPs also have the ability to vote on the trading fee associated with each instance of the AMM. This empowers them to influence their earnings and make the pool more appealing to traders.
To maximize passive earnings, LPs must carefully choose pools with high demand, limited supply, and appropriate fee rates. However, it is essential for LPs to consider the potential impact of impermanent loss, a risk associated with providing liquidity.
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Alternatively, as traders, users can benefit from the XRPL’s native AMM by gaining access to a wide selection of tokens and trading pairs that may not be available on other platforms. Moreover, the XRPL’s efficient and cost-effective transaction capabilities enhance trading experiences for users.
Traders leveraging the AMM can generate passive income by capitalizing on arbitrage opportunities across multiple pools and platforms to take advantage of price discrepancies and profit potentials.
It is crucial to note that the XLS-30D amendment is currently in the development phase and remains inactive at present.
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