Ripple’s CTO Advocates for AMM Feature in XRP Ledger

David Schwartz, Ripple’s Chief Technology Officer, has expressed support for integrating an automated market maker (AMM) into the XRP Ledger (XRPL) to facilitate the development of decentralized exchanges (DEXs).

In a recent social media post, Schwartz referred to AMMs as an intriguing element of decentralized finance. He underscored that any implementation should only move forward with the agreement of the XRPL community.

The XRPL serves as a decentralized blockchain system, providing a platform for swift and safe transactions involving XRP cryptocurrency. The XRPL uses the Ripple Protocol Consensus Algorithm (RPCA) in place of traditional systems, guaranteeing rapid transaction processing and expandability.

The platform lays the groundwork for building decentralized applications (dApps). AMM, in contrast, is a decentralized exchange model grounded in a mathematical equation that determines asset prices by assessing the assets’ demand and supply, recalibrating the prices as needed.

In response to a community member’s inquiry about when AMMs might be operational on XRPL following a governance vote, Schwartz mentioned that if a majority endorses the proposal, the integration could occur within roughly two weeks.

Schwartz also noted that, to his knowledge, there aren’t any validators presently backing a majority vote. Ripple’s version 1.12.0 saw the introduction of the AMM feature, alongside the potential clawback function. According to the Ripple team, adding an AMM isn’t merely about integrating a novel trading system; it would also promote cohesion with the XRPL’s decentralized exchange.

Although Schwartz acknowledges the significance of this feature, he advised validators to refrain from casting solitary votes for these modifications. He emphasized the importance of the community arriving at a mutual decision first. Validators should cast a ‘YES’ vote predominantly when they discern consensus in the community and adequate nodes favoring the change.

Earlier in the year, Schwartz also voiced concerns for those pondering investments in XRP via an AMM. He cited three main reasons for this wariness.

Schwartz first pinpointed the vulnerability of other digital currencies within the AMM, explaining that price shifts in a single asset might influence the value of all pooled assets, including XRP.

He acknowledged the utility of AMMs for trading purposes but urged investors to meticulously scrutinize and comprehend the associated risks before opting to store XRP in an AMM. Schwartz also brought to light the confined scope for notable gains, noting that while AMMs can offer liquidity for XRP and other tokens, substantial price appreciation for XRP isn’t a guarantee.

Ripple Triumphs in SEC Dispute

In a related update, Judge Analisa Torres has turned down the U.S. Securities and Exchange Commission’s (SEC) request to appeal their defeat against Ripple Labs.

The SEC aimed to challenge a previous partial decision that favored Ripple, stating that retail sales of XRP tokens didn’t conform to the statutory definition of a security.

Nevertheless, Judge Torres dismissed the SEC’s plea, arguing they couldn’t substantiate controlling legal queries or significant divergences in opinion. A court session is scheduled for April 23, 2024. Before the ultimate pretrial meeting, representatives from Ripple and the SEC, led by Gary Gensler, will convene in person for a minimum of an hour to discuss a potential settlement.

Judge Torres believed that the SEC’s appeal wouldn’t notably hasten the case’s conclusion. This decision is seen as a pivotal victory for Ripple, reinforcing the legitimacy of the earlier judgment.