AMM Would Boost XRP Utility and Demand on XRPL

On Nov 18, 2023

The CTO of Ripple has addressed the long-standing rumors of the upcoming AMM changing XRP’s tokenomics.

Voting for this implementation is still ongoing as the majority says “No” to the initiative.

It was recently reported that Ripple Chief Technology Officer David Schwartz had called on the XRP Ledger (XRPL) validators to support the Automated Market Maker (AMM) feature after consensus is reached within the community. The community members have on several occasions raised questions on the timeline for AMMs to go live on the XRPL after governance voting. Schwartz stated that the changes could be implemented in 2 weeks if the amendment is supported.

In general though, validators shouldn’t vote YES individually. The community should make a decision and then validators should nearly all vote YES when they believe the community is on board and enough nodes support the change. The amendment voting process is intended to coordinate activation and prevent activation if a problem is discovered. It’s really not supposed to be a governance mechanism. IMO, validators should generally vote what they think the community has agreed on, not what they think is best.

Speaking on the importance of the upcoming AMM, Jasmine Cooper, Lead Product Manager at Ripple stated that it will bolster more need and utility for XRP. In a discussion with a renowned YouTuber and XRP influencer Eri, the question of whether the AMM introduction could change the tokenomics of XRP was raised. This question has been raised in various crypto communities with the person behind the popular media account, Dig Perspectives, asking whether AMM could transform XRP into a stablecoin.

Change of XRP’s Tokenomics Rumors Dismissed by the Lead Product Manager at Ripple

Crypto author Panos Mekras has already addressed this question in the past, explaining that XRP’s tokenomics are Immutable. According to Mekras, it is almost impossible for this fundamental change to take place. Speaking more on this, Mekras stated that AMM would thrive on volatility.

The characteristics of XRP can NEVER change. It will always remain the native coin of the XRP Ledger, a decentralized digital asset that anyone can trade freely. XRP can never become a stablecoin for that reason, it’s technically not possible and makes no sense whatsoever.

Cooper also made a similar argument in an interview with Eri, stating that AMM would not change the tokenomics of the asset. According to her, XRP operates on the XRPL as a utility token for gas and account reserves.

I really don’t think it’s going to change the tokenomics.

While dismissing these rumors, Cooper explained that adding another layer to the need and pushing utility to a new height would be experienced amidst the growing interest.

as we see growth and adoption, I think we’ll just see a greater need and greater utility of the token itself.

For now, the validator consensus for the introduction of the AMM has not reached the required level. As of press time, voting was still ongoing with 40 percent consensus. 14 validators including Ripple and Bithomp have so far voted “Yes”. 21 percent of validators are also holding onto “No”.

XRP is currently trading at $0.605056 after declining by 1.9 percent in the last 24 hours. In the last seven days, the asset has declined by 9.9 percent.

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