Ripple's CTO David Schwartz explained how the RLUSD liquidity pool based on Automated Market Maker (AMM) helps protect XRP holders by ensuring balance and stability.
How AMM Liquidity Pools Work
Schwartz clarified that the AMM liquidity pool operates by holding equal values of RLUSD and XRP. When the price of XRP declines, the pool automatically converts RLUSD into XRP. Conversely, when XRP appreciates, it converts back into RLUSD. This mechanism maintains balance and ensures the pool value remains stable even during volatile conditions.
Long-Term Value and Stability of AMM Pools
The Ripple CTO noted that liquidity providers aim to stay long on XRP while minimizing risks associated with single-asset volatility. By combining RLUSD and XRP, they may benefit from market swings while enjoying enhanced protection.
Major XRP Ledger Upgrades
Recently, XRP Ledger activated three major upgrades, securing over 80 percent validator support. These enhancements improve performance, strengthen security, and increase reliability across the network. They include stricter checks for AMM stability, new safeguards for NFT issuers, and corrections to payment channel configurations.
Schwartz’s explanations highlight how RLUSD liquidity pools provide balance, efficiency, and stronger protection for XRP holders. Combined with system-wide upgrades, these changes represent another step in advancing the XRP Ledger ecosystem.
