8 months ago
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Ripple’s Chief Technology Officer (CTO), David Schwartz, has given his opinion on whether or not the AMM (Automated Market Maker) functionality will affect THE XRP price. This comes following concerns by some members of the XRP community that the feature could cause XRP’s to drop significantly.
AMM Feature Unlikely To Affect XRP Price
Schwartz mentioned in an X (formerly Twitter) post that he doesn’t think the AMM feature on the XRP Ledger will have so much impact on the XRP price. He went on to recognize how new strategies, such as “arbitraging against the DEX”, can affect a token’s price. However, he opined that this volatility harvesting strategy will not decrease XRP’s price volatility any time soon.
He further explained that his assertion is because DEX trading activity on the Ripple Ledger represents only “a drop in the XRP trading ocean.” Schwartz’s argument is valid, considering that the DeFi landscape in the XRP ecosystem is just picking up and is still far behind Ethereum and Solana’s.
Therefore, as Schwartz suggested, DEX trading volume on the XRP Ledger must significantly increase before it can play a crucial role in the XRP price discovery. The novel AMM feature, introduced as far back as September 2023, was expected to go live when the Rippled version 1.12 was released last year, but that didn’t happen.
Back then, Schwartz clarified that the AMM amendment would go live after validators voted on whether or not to enable it on the network. He added that the update would take about two weeks to be implemented if the proposal is passed. However, the 80% threshold of ‘Yes’ votes from validators needed to pass the proposal was only met this year.
Update On The AMM Launch
The AMM feature is yet to launch on the XRPL Ledger. Schwartz had revealed they wouldn’t include the upgrade in the Rippled version 2.1, noting that validators won’t have enough time to implement the feature and ran the risk of amendment blocking. As such, he stated that an additional week or two would be needed before the AMM amendment takes place.
However, an update has yet to be provided since then. XRPL validator Vet recently revealed in an X post that just over 31% of node operators are now running on the latest rippled version. This means it could take a while before these validators focus on implementing the AMM functionality.
At the time of writing, the XRP price is trading at around $0.5544, up almost 3% in the last 24 hours, according to data from CoinMarketCap.
Featured image from Coinpedia, chart from Tradingview.com
