XRP Ledger Upgrade Seeks to Bridge DeFi Gap with New AMM Features

A proposed amendment to the XRP Ledger's Automated Market Maker (AMM) system aims to address one of its major limitations in DeFi.

The amendment, titled 'AMM Swappable Curves,' would allow liquidity providers on the network to choose from three different curve types: constant product, concentrated liquidity, and StableSwap. This flexibility is expected to improve trading efficiency and capital utilization for institutional investors.

According to the proposal, concentrated liquidity would enable liquidity providers to target a narrow price range where most trades occur, resulting in more usable depth per dollar deposited. StableSwap, on the other hand, is optimized for assets that trade near 1:1, such as dollar-pegged stablecoins or wrapped representations of the same asset.

The amendment also ensures that existing pools would remain untouched and continue to operate on their current constant product model until they are migrated to one of the new curve types. This approach is expected to minimize disruptions and ensure a smooth transition for users.