Ripple Chief Technology Officer David Schwartz posted a tweet quickly addressing the recently launched AMMs on XRP Ledger. He did this to clarify what happened and went into detail about how Ripple’s AMMs work on XRPL.
The Automated Market Maker (AMM) feature was launched on the XRP Ledger on Friday, and Ripple's CTO posted a celebratory tweet about it over the weekend. However, shortly after, AMM encountered a serious error that resulted in a temporary ban. The RippleX development team has already noticed this discrepancy in several AMM liquidity pools and is working to resolve it.
Comment from Ripple's CTO on the AMM bug
David Schwartz tweeted that the above issue was not caused by the one-sided deposit feature built into AMMs. Here he reiterated his warning from Saturday about these types of deposits – they “enable an optimized user experience, but can result in price impact when pools have less liquidity.” Previously, he warned that this “price impact” is essentially a loss for traders during of the deposit process – the system reports this as “slippage”. However, the CTO warned that this is likely to happen very rarely, because if the AMM remains out of balance, it most likely means that other traders will also miss the opportunity to make profits from it too.
David Schwartz’s advice for trading via these new AMMs in the future is: “It is best for users to check the price impact in their tools before submitting a transaction, and front-end apps should display this information to users .”
For the avoidance of doubt, the recently identified issue is not caused by the one-way deposit feature, which is an intended functionality of the AMM design. One-way deposits enable an optimized user experience, but may result in price impacts when pools have less liquidity.… https://t.co/bnp5v8avnK — David “JoelKatz” Schwartz (@JoelKatz) March 24, 2024
RippleX developer calls for the creation of a Canary network
RippleX developer (inventor of the Xumm wallet) Wietse Wind published a tweet in which he explained that the AMM bug issue in the XRP Ledger requires the creation of a canary network on Ripple's Layer 1 blockchain.
According to Wind, the Canary Network would serve as a test bed for various key upgrades, tools and products before they go live on the mainnet.
Wietse insisted that the recent major problem with XRPL would never have occurred if such a testing ground had existed and the AMM function had been tested on it.
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