The XRP Ledger Foundation has introduced a new draft proposal that could significantly expand how trading and liquidity work on XRP’s decentralized exchange (DEX). The proposed update, called AMM Swappable Curves, will allow XRPL users and liquidity providers to choose different pricing models when creating liquidity pools. This would mark a major upgrade to XLS-30, XRPL’s current Automated Market Maker (AMM) system, which launched on the mainnet in March 2024.
How XRP’s Proposed DeFi Upgrade Changes Things For Users
Currently, the original XRPL AMM uses only one curve model called the “constant product” system. This model works well for volatile assets, but can be less effective for stablecoins or tokenized real-world assets (RWAs). The new proposal, announced by the XRP Ledger Foundation in an X post on May 26, aims to solve that problem by introducing two additional models, StableSwap and concentrated liquidity, for Ledger users and investors.
According to the Ledger Foundation, these new options could improve capital efficiency and reduce price slippage. They said that it also offers more accurate pricing across several markets, including foreign exchange, stablecoins, RWAs, and DeFi trading.
The proposal also mentions an upgrade called the pluggable curve architecture. With this new update, liquidity pool creators will finally be able to choose the pricing formula that best matches the type of assets being traded on the Ledger. Instead of forcing every market into a single system, the AMM could support multiple trading models simultaneously.
Notably, the upgrade proposal was filed by core developers Denis Angell and Roman Thpt. It is currently still in the draft stage, meaning validators have not yet approved it. If passed, the amendment would extend XLS-30 without replacing or disrupting existing liquidity pools already running on the Ledger.
Why The Proposal Matters For Stablecoins and RWAs
On GitHub, the Foundation further explained the StableSwap model in its XLS-30 upgrade proposal. StableSwap is designed for assets such as USDT and USDC, as well as tokenized RWAs tied to fiat currencies. Since these assets trade around the same value and see very limited price swings compared to cryptocurrencies like XRP and Bitcoin, StableSwap can offer tighter pricing and lower slippage during trades.
The proposal also mentions a curve diversity feature. Under this structure, the Ledger would no longer force every asset pair to use the same trading model. For example, volatile assets like XRP or meme coins experience sharp price movements, so the current the Ledger model works well for them. However, since stablecoins like USDT and USDC tend to stay close in value, the model becomes less efficient, sometimes even resulting in worse pricing during trades.
Overall, the proposal would allow the Ledger developers and users to choose the trading system that best suits the assets in a pool. Stablecoins could use StableSwap to keep prices steadier and reduce price swings during trades. Meanwhile, larger traders and liquidity providers could use concentrated liquidity pools to place funds closer to active trading prices and make better use of their money.
Featured image from Adobe Stock, chart from Tradingview.com
Editorial Process for bitcoinist is centered on delivering thoroughly researched, accurate, and unbiased content. We uphold strict sourcing standards, and each page undergoes diligent review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance, and value of our content for our readers.
Be the first to comment