In latest replies on social media X, Ripple CTO David Schwartz explains AMM liquidity swimming pools in relation to the Ripple USD (RLUSD) stablecoin. This was in response to an X consumer who had sought clarification as regards the subject material.
The pool holds half RLUSD and half XRP. The belief of the pool is that LP token holders wish to be lengthy XRP and to revenue from XRP volatility.
— David ‘JoelKatz’ Schwartz (@JoelKatz) August 30, 2025
Automated Market Maker (AMM) on XRP Ledger makes use of liquidity swimming pools as an alternative of conventional order books to facilitate trades. The AMM performance was enabled with the modification XLS-30D in March 2024.
The clawback modification, which went dwell in January this yr, enabled Ripple’s RLUSD stablecoin to be floated and traded straight on XRP Ledger’s DEX, boosting its liquidity and buying and selling choices and growing decentralized finance (DeFi) exercise on the XRPL community.
RLUSD AMM liquidity pool defined
In line with Schwartz, the AMM liquidity pool holds a pile of RLUSD and XRP, every of roughly equal worth. It additionally points tokens that symbolize claims towards the pool for a proportional share of its belongings.
When the worth of XRP goes down, the pool converts RLUSD to XRP to equalize the values; then again, when XRP value goes up, the pool converts XRP to RLUSD for worth equalization.
The purpose is to at all times improve the worth of the pool fixed (the quantity of RLUSD occasions the quantity of XRP divided by the variety of issued tokens excellent) and by no means to permit it to lower.
In line with the Ripple CTO, the concept behind the AMM liquidity pool is that, no matter whether or not XRP’s value takes a spherical journey, the worth of every liquidity token would serve to maximise the pool fixed.
The worth of the liquidity tokens within the pool may improve as people use the pool as a liquidity supply to commerce XRP for RLUSD and pay a variety. The Ripple CTO said that whereas the tokens achieve and lose worth with adjustments in XRP’s value, it might be much less important than these skilled by holding solely XRP.
In additional responses, the Ripple CTO defined that for the reason that liquidity pool holds half RLUSD and half XRP, the belief is that the token holders wish to be lengthy on XRP and revenue from its volatility.
