Ripple CTO Shares His Expectations For XRP in XRPL AMM

Ripple CTO David Schwartz recently clarified the use of XRP and other assets on the upcoming XRPL Ledger (XRPL) AMM.

With the XRPL Automated Market Maker (AMM) feature set to go live in the next three days, discussions around its functionality and features have enveloped the XRPL community, leading to multiple speculations. One such speculation is if the AMM only works with XRP.

In a recent post on X, Davis Schwartz addressed an inquiry from a community member seeking clarification on whether the forthcoming AMM would exclusively support XRP pools or accommodate multiple assets.

This uncertainty stems from the fact that most reports on the AMM feature focus on XRP. For instance, The Crypto Basic has repeatedly highlighted the potential for XRP holders to earn passive income from their assets when they deposit them into liquidity pools on AMM instances.

However, few discussions exist around this prospect for other assets, prompting a belief that the feature might only support XRP. In addition, last November, Ripple’s Lead Product Manager, Jasmine Cooper, stressed that the AMM could help bolster XRP’s utility, further adding to the growing speculation.

Ripple CTO Provides Clarification

Responding to the recent inquiry, Schwartz confirmed that the AMMs would support not only XRP but also other cryptocurrencies. The Crypto Basic has periodically highlighted this fact.

According to the Ripple CTO, market participants can generate any AMM instance with two crypto assets supported by the XRP Ledger. This could include CORE/XRP, FURY/USD, or even CSC/RPR. The only criterion is that both assets are on the XRPL.

AMMs can be created with any two assets supported by the XRP Ledger. I suspect AMMs where one of those assets is XRP will be the most popular, but that's just my expectation.

— David "JoelKatz" Schwartz (@JoelKatz) March 18, 2024

However, Davis Schwartz stressed that he expects XRP to dominate the pools despite the liberty of market participants to trade other assets. He asserted that AMM pools where one of the assets is XRP would most likely be the most popular.

This is due to XRP’s position as the leading asset on the network as well as its gas token. Some community members have also begun speculating about the possibility of Ripple leveraging some of its escrowed XRP to provide liquidity on an AMM. 

Projected Impact on XRP

Nonetheless, Schwartz does not see the benefit of this practice, as it would result in selling pressure. Panos Mekras, founder of Anodos Finance, echoed this, stressing that if Ripple only provided XRP for AMMs, the move would be bearish for the asset.

Meanwhile, the implementation of the AMM functionality is slated for March 22, seven days after the amendment regained the minimum validator consensus on March 15. On-chain sleuth Mr. Huber believes XRP’s price could drop following the implementation of the feature, citing Stellar’s history.