In the evolving landscape of cryptocurrency, the dialogue around Ripple’s potential involvement in the XRP Ledger’s automated market maker (AMM) system takes a new turn. In a recent X post, renowned crypto analyst and Anodos Finance co-founder Panos Mekras aired his concerns about Ripple’s possible participation in the AMM, which has only XRP tokens at stake.
Mekras warned that such a strategy could exert selling pressure on XRP, thereby harming its market price. Mekras argued against Ripple’s solitary use of XRP in the AMM, highlighting the risk of depreciating the asset’s value.
To navigate this challenge, Mekras proposed a balanced approach whereby Ripple could contribute both cash and XRP to the AMM pools, leveraging its substantial financial resources and monthly XRP sales. He suggested that such a strategy would mitigate the risks associated with single-sided deposits and bolster the overall health of the XRP ecosystem. Mekras also recommended the inclusion of multiple XRP/stablecoin pairs to enhance Ripple’s On-Demand Liquidity (ODL) business.
This skepticism emerged following comments from Ripple’s Chief Technology Officer, David Schwartz, about the company’s contemplation of allocating XRP tokens from its escrow wallets to fuel the AMM system. Schwartz’s remarks revealed his indecision regarding the initiative’s impact on the XRP ecosystem, stating, “I’m not sure if that would be a bad thing or a good thing”.
Despite his professed fondness for the XRPL AMM feature, Ripple’s CTO did not provide a concrete stance, provoking further inquiry from the community. Schwartz suggested that participating in the AMM exclusively with XRP could lead to the sale of half of the XRP deposited at the time of deposit, a move that could negatively influence the market value of XRP.
This debate unfolds as the AMM amendment secures the necessary consensus from XRPL validators, setting the stage for its implementation on the XRP Ledger by March 22. The crypto community, particularly the XRP Army, eagerly anticipates the outcome of this development, which could have significant implications for Ripple’s strategy and the broader XRP market.
