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Here’s How They Can Help Each Other – Crypto News

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The potential launch of automated market making functionality on top of XRP Ledger might change the way Ripple’s on-demand liquidity corridors work, a seasoned community enthusiast says. At the same time, other voices in the XRP army raise concerns about this integration.

Ripple’s ODL might reward XRPL AMM liquidity providers: Community

Once the XRP Ledger AMM amendment is activated, its liquidity providers will be able to benefit from the activity of the Ripple Payments (previously known as On-Demand Liquidity or ODL) service. This statement was shared by Ripple’s pseudonymous enthusiast who goes by @WKahneman on X.

He explained that while Ripple Payments and XRPL AMM will be separate independent mechanisms, they might cooperate for mutual benefit. Ripple Payments might source liquidity from AMM, and anyone will be able to participate in on-chain market making with an asset utilized in this or that “corridor.”

However, to make this dual-system mechanism work, the XRPL/Ripple ecosystem will need an interface for liquidity providers, the influencer admitted.

The team of XRPL-focused analytical platform XPMarkets opined that this hypothetical tool will only work with a large volume of liquidity injected from the very beginning. Otherwise, the price slippage will be too high and the usage of XRPL AMM by Ripple Payments will make no sense:

In order for such thing to function, a really high TVL is required. We are talking tens of millions of liquidity in a single pool. Anything less will result in significant price impact and inefficiency for large capital. 

Ripple’s ODL was the most popular product of Ripple in terms of retail cross-border payment. It was rebranded to Ripple Payments in mid-September 2023, as U.Today reported.

XRPL AMM needs five votes to pass

Also, Jon Nilsen, the owner of an XRP Ledger validator, stressed that injecting liquidity in XRPL AMM is too risky, in particular during the first phases of its operations.

Meanwhile, the exact timeline for the XRPL AMM activation remains unclear. As of printing time, it only scored 23 votes in favor out of the 28 votes it needs to pass.

Unlike Ethereum (ETH), in the XRP Ledger ecosystem, amendments have no voting deadline. However, the XRPL AMM proposal discussion has already scored the status of the longest in the last years.

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