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HomeNewsXRPL Launches Regulatory-Focused AMM Upgrade to Boost Liquidity and Compliance

XRPL Launches Regulatory-Focused AMM Upgrade to Boost Liquidity and Compliance

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  • XRPL’s AMMClawback upgrade enables RLUSD liquidity pools and regulatory asset retrieval, targeting compliance without order books.
  • The update replaces order books with direct swaps, reducing fees and slippage for XRP/RLUSD trading.

The XRP Ledger (XRPL) has activated the AMMClawback upgrade, introducing automated market maker (AMM) pools for Ripple’s USD stablecoin (RLUSD) and modifying how liquidity providers manage assets. The update, finalized after months of testing, aims to align decentralized trading with regulatory requirements while addressing recent declines in network activity.

AMMClawback allows token issuers to retrieve assets from liquidity pools under specific conditions, such as regulatory freezes or illicit activity. For example, if authorities flag an account holding RLUSD, issuers can claw back associated tokens from AMM pools

This function prevents frozen assets from circulating further without disrupting broader trading activities. The upgrade also removes reliance on traditional order books, enabling direct swaps between RLUSD and XRP via pooled liquidity.

XRPL-DEX-AMM-volume-santiment
Source: Santiment

The changes particularly impact RLUSD, Ripple’s dollar-pegged stablecoin. Holders can now deposit RLUSD into AMM pools to earn fees, incentivizing participation. By consolidating liquidity, the upgrade aims to reduce transaction costs and slippage for traders.

XRPL developers assert this could position the ledger as a more efficient venue for stablecoin transactions compared to rivals like Ethereum or Solana.

New guidelines require liquidity providers to adhere to stricter compliance protocols. Unauthorized accounts can deposit tokens only once per paired asset, limiting exposure to non-compliant actors.

Issuers must use the clawback feature judiciously, balancing regulatory obligations with user trust. These rules target misuse while maintaining the decentralized ethos of XRPL’s native DEX.

The upgrade arrives amid challenges for XRPL’s ecosystem

Data shows a 75% drop in AMM trading volume since March, alongside a 40% decline in active addresses. Slippage rates have risen as liquidity providers withdraw funds, deterring traders.

XRP-Ledger-Active-Addresses-1-2048x1152
Source: CryptoQuant

Developers hope AMMClawback’s rewards system will reverse this trend by attracting market makers with clearer compliance safeguards and earning potential.

For XRP, the update could stabilize network usage. ETHNews analysts note that RLUSD integration may diversify XRPL’s utility beyond XRP transactions, which currently dominate its DEX. However, adoption hinges on issuers and users embracing the clawback mechanism without perceiving it as overreach.

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Isai Alexei
Isai Alexei
As a content creator, Isai Alexei holds a degree in Marketing, providing a solid foundation for the exploration of technology and finance. Isai's journey into the crypto space began during academic years, where the transformative potential of blockchain technology was initially grasped. Intrigued, Isai delved deeper, ultimately making the inaugural cryptocurrency investment in Bitcoin. Witnessing the evolution of the crypto landscape has been both exciting and educational. Ethereum, with its smart contract capabilities, stands out as Isai's favorite, reflecting a genuine enthusiasm for cutting-edge web3 technologies. Business Email: [email protected] Phone: +49 160 92211628
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