Ripple is pushing a new upgrade to its XRP ledger that will introduce some very important features. In fact, the company’s CTO has expressed his excitement about the upgrade on multiple occasions, saying that he’s really looking forward to it.
But this has also sparked a discussion about the impact of the implementation on the price of XRP. Let’s dive in.
What’s all the fuss about?
As CryptoPotato reported, Ripple is in the process of implementing an upgrade to its XRP ledger that includes the integration of two very important features: an automated market maker and a clawback feature. The first is of interest to this story.
The Automated Market Maker (AMM) is non-custodial and should be integrated into the DEX as a native feature, “in a way that provides higher returns to those who provide liquidity to the AMM and minimizes the risk of losses due to volatility.”
According to the technical specifications of the upgrade:
XLS-30 will integrate a native automated market maker on the – reads the announcement.
What about the price of XRP?
A user asked David Schwartz – Ripple’s CTO – if this could affect Ripple’s price.
When AMM goes live and a number of XRP holders start putting their XRP into pools, and since many of us only own XRP, the price of XRP will not go down because the AMM will sell a lot of Balancing pools?
Schwartz said:
It is true that there is a net increase in selling pressure in the short term when AMM comes primarily from XRP holders. I doubt that will matter and may even be outweighed by people going the other way.
The CTO also said that, in theory, the AMM should reduce volatility by selling on price increases and buying on price decreases, essentially converting volatility “into yield.”
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