According to U.Today, XRP, currently the seventh largest cryptocurrency, has achieved a significant milestone in the decentralized finance (DeFi) market. The total amount of XRP pooled in the XRPL Automated Market Maker (AMM) has exceeded 10 million XRP, as reported by XRPscan, a prominent XRP Ledger explorer. This achievement underscores the increasing adoption and use of XRP in DeFi.
Automated market makers (AMMs) are a type of decentralized exchange mechanism that uses liquidity pools to algorithmically price assets, rather than creating offers of preset specifications. Liquidity pools allow holders to earn a portion of trading fees by providing their tokens as liquidity. In the case of XRP Ledger, a built-in central limit order book (CLOB) manages all XRPL transactions for fungible tokens. This CLOB, which has been part of the XRPL since its inception, offers the benefits of fewer trust assumptions and centralized liquidity, as opposed to the inherent vulnerabilities of smart contracts.
In addition to the existing CLOB, an automated market maker (AMM) was voted into the protocol in Q1, 2024, as outlined by the XLS-30 standard. The increase in the number of XRP locked in AMM pools to 10 million XRP indicates a strong engagement with the XRPL's infrastructure. As the total pooled XRP in the XRPL AMM grows, it could draw more participants to XRP Ledger. Increased liquidity and user participation could lead to further innovations, new financial products, and a more robust DeFi environment.
In related news, digital asset investment products experienced $584 million in outflows for the second consecutive week, totaling $1.2 billion. Bitcoin was the primary focus, with $630 million in outflows. In contrast, XRP saw $0.7 million in inflows, suggesting that investors saw the altcoin market's downturn as a buying opportunity. At the time of writing, XRP was down 1.47% in the last 24 hours to $0.476, reflecting the general market downturn, partly due to macroeconomic uncertainty and fears of additional selling pressure following Mt. Gox's latest announcement.
