XRPL AMM Proposal Could Improve Liquidity for Tokenized Asset Trades - Blockonomi

by · Blockonomi

TLDR

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  • XRP Ledger developers have proposed a draft AMM Swappable Curves amendment to expand the network’s DeFi tools.
  • The proposal would add constant product, concentrated liquidity, and StableSwap curve options to XRPL AMM pools.
  • The draft would let liquidity providers choose how new pools price trades when the pool is created.
  • Existing XRPL AMM pools would remain unchanged and would not need forced migration.
  • The upgrade could help stablecoin pairs and tokenized assets trade with better capital efficiency.

XRP Ledger has moved closer to a DeFi upgrade that could give liquidity providers more control over how AMM pools price trades.

The XRPL Standards repository published the draft amendment under the title “AMM Swappable Curves,” with the proposal describing a plan to add constant product, concentrated liquidity, and StableSwap curve options to the ledger’s automated market maker.

The draft was authored by XRPL core developers Denis Angell and Roman Thpt. The report said the proposal remains at the draft stage and would need a separate amendment vote before it could activate on the XRP Ledger.

XRPL AMM Proposal Targets Liquidity Design

According to the XRPL Standards discussion, the current XLS-30 AMM uses one constant product model with liquidity spread across the full price range. The proposal says this setup can waste deposited capital when assets usually trade close together, including stablecoins and other correlated pairs.

Under the draft, pool creators would be able to select a curve type when they create a pool. The XRPL Standards proposal says the chosen curve would remain locked for the pool’s lifetime, while older pools would stay on the existing constant product model without forced migration.

As per the reports, the draft also reserves a fourth curve type called Smart AMM for a later specification. The report said Smart AMM would cover a fully programmable curve model, while the current draft focuses on the three fixed curve designs.

The XRPL documentation describes AMMs as liquidity pools that hold two assets and allow users to swap between them through a formula-based exchange rate. The same documentation says liquidity providers receive LP tokens after depositing assets into an AMM pool.

Stablecoin And RWA Trading Could Benefit

In the proposal’s own explanation, concentrated liquidity would let liquidity providers place funds inside a narrower price range, rather than across every possible price. The XRPL Standards discussion says this design can create more usable depth for each dollar deposited when most trading happens around a specific price zone.

StableSwap, according to the draft, is designed for assets that usually trade near the same value. The proposal lists stablecoins and similar representations of the same asset as examples of markets where this curve type can be useful.

The timing places the AMM draft beside XRPL’s growing tokenization activity. An earlier report stated that more than $3 billion in tokenized real-world assets are now on the XRP Ledger, including a recent Ripple and JPMorgan-linked tokenized Treasury pilot.

In a separate May 7 report, Ripple, JPMorgan’s Kinexys, Mastercard, and Ondo Finance processed a tokenized U.S. Treasury redemption on XRPL in under five seconds. The report said the pilot involved Ondo’s OUSG tokenized Treasury fund.

XRPL’s AMM has been live since 2024. The XRP Ledger documentation said the AMM amendment was scheduled for mainnet activation on March 22, 2024, adding automated market maker functionality directly to the protocol.

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