The XRP community may soon welcome a protocol to earn passive income with XRP without the dreaded risk of impermanent loss.
Crypto Eri, a renowned figure in the XRP community and prominent YouTuber, hinted at this significant update in a recent post on X.
Addressing XRP holders, Eri revealed that a new protocol is set to launch, allowing participants to earn from the pool without risking their initial XRP investment. She noted the protocol contrasts with automated market maker earnings, where impermanent loss can occur.
“I imagine it will be popular,” the XRP community figure remarked in the notification.
Hello #XRP holders. Unlike the AMM earnings where impermanent loss can happen, there is a (new) protocol launching for earning without risking principle.
I imagine it will be popular.
Stay tuned. I'm working on helping to share the details this week.
— 🌸Crypto Eri 🪝Carpe Diem (@sentosumosaba) February 26, 2024
However, Eri pointed out that the complete details regarding the operational principles remain undisclosed. She noted that efforts are underway to reveal crucial details later this week.
XRP Army Demands Clue
Meanwhile, XRP community members have requested Eri to offer them some insight into the new protocol. However, her response indicated that she cannot disclose much information for now.
Nonetheless, Eri hinted that the team behind the new protocol is associated with the Wave Of Innovation crew, the XRP Gold Coast 2024 Conference organizers scheduled for March 22 to 24.
Would have to ask if I could give a big clue. But for you Dazz, I'll give a baby clue. They are part of the 🌊 @wave_of_innov lineup. Oh gosh, maybe that is too big.😂
— 🌸Crypto Eri 🪝Carpe Diem (@sentosumosaba) February 26, 2024
Earning XRP Passively via AMM
Significantly, Eri’s update comes amidst the XRP community’s anticipation of the pending AMM proposed under XLS-30 to pass.
Notably, the XRP Ledger community recently postponed implementing the AMM feature upon discovering a bug that could impact its performance. The bug has since been rectified through a new amendment, with the AMM feature attaining a 74% consensus from validators.
Upon successful implementation, XRP holders can earn passively by committing their tokens to become liquidity providers to decentralized exchanges. However, as with other liquidity-providing services, the risk of impermanent loss exists.
Meanwhile, at the core of XLS-30D is a novel “continuous auction mechanism” to mitigate impermanent loss by encouraging arbitrageurs to bid for the opportunity to exploit price differences.
This incentivizes liquidity providers to retain a significant portion of a pool’s trading fee earnings. At the same time, it motivates arbitrageurs to bid with near-zero trading fees, thereby stabilizing volatility consistently.