Key Myths About XRP's AMMs Debunked by Anodos Co-Founder

Panos Mekras, co-founder of Anodos Finance, precocious took to the X societal media web to clear up the main misconceptions astir the XRP Ledger's Automated Market Maker (AMM) feature.

As noted by Merkas, providing liquidity should beryllium seen arsenic a abstracted income strategy, meaning that users bash not person to adhd the XRP tokens that they mean to hold. "As a liquidity provider, you attraction astir income and fees earned by the trading activity. It's amended if you don't attraction if you extremity up with much connected 1 broadside and little connected the other. Total nett is what matters," helium added.

Impermanent loss, a risky script that tin beryllium triggered by terms volatility causing a impermanent alteration successful value, tin really payment users successful immoderate scenarios, according to the Anodos Finance co-founder.

Notably, antithetic pools person antithetic degrees of hazard associated with them. "Not each pools are created equal, and not each pools person the aforesaid risk," Mekras said. Providing liquidity into a stablecoin excavation with pairs similar USD/EUR carries minimal risk. Meanwhile, pools that incorporate 2 volatile cryptocurrency tokens that thin to person a precocious level of correlation (case successful point: XRP and XLM) tin beryllium rather risky.

He has besides noted that determination is nary staking oregon earning with XRP tokens, meaning that users tin lone springiness their assets to AMM, frankincense allowing others to commercialized them. In return, they tin get a interest for that.

XRP Ledger's AMM diagnostic went unrecorded earlier this year. However, its motorboat has been mired by technical issues.