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Order Book vs. AMM, should XRPL add built-in AMM support ?


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On 1/10/2021 at 4:35 AM, tulo said:

Not in AMM implementations with oracles.

So FLARE? Flare with the upcoming flare finance?  Also Any smart contract platform like Eth/Dot/Cardano that are integrated with Chainlink!?Uniswap isn't integrated with chainlink atm.

Edited by stickynoodle69
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I propose that we combine everything using federated side chains.

xrp would become a meta blockchain with settlement as the base layer. Then each idea can be federated as a sidechain including flare. 

If flare could exist as a pugin within the xrp ledger and also exist as a separate chain then xrp ledger could act as a settlement layer between amm.

-> xrpl smart plugins aka federated side chains 
      -> hooks -> if hooks can trigger smart contracts then xrpl would essentially be touring complete. 
      -> flare -> xflare
                       flare dapps
      -> xrp smart ledger ->  xrp backed stable coins
                                            xrp smart swap
                                            banking settlement plugins
                                            smart IOU bridge for trustless smart contracts
      -> other chains eth,klay, 

In this scenario XRP would be a meta language focused on messaging and settlement. Centralised messaging is done by ripple products, decentralised messaging should be done through the XRP ledger through hooks and smart contracts. 

why? for my sanity. Otherwise you guys are just slapping technology together faster than I can keep up with

edit: also is the idea of a federated smart chain whose coin is actually XRP. A sister chain similar to binance chain and binance smart chain. This would be called xrp smart ledger or similar. xsmart ledger. No new coin but utilises "wrapped XRP" as the native currency. Wrapped XRP would be XRP locked in escrow by a smart contract

Edited by jargoman
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Aggregation of orderbook based liquidity with AMM liquidity might have some real benefits.

Specifically at small-caps and moments of high volatility when the order book is hollowed out, AMM will step in to create market at those moments. And a new arbitrage playing field where AMM liquidity is exchanged for order book liquidity. B)

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If anyone creates a dex

On 6/22/2021 at 11:27 PM, yxxyun said:


I ported one AMM bots to XRPL DEX.

This bot discretizes the continuous price curve and creates a number of limit orders to simulate the curve.

But AMM DEX have two more option to incentive users to provide liquidity:

1. Trade fee 

2. Issue new token to incentive users by farming. 

You'd need a slippage fee to avoid impermanent loss. If a person swaps 2% of the pool. A 2% slippage fee would be charged. 5% of the pool, 5% slippage fee. 

In other words, a price increase of 1% should result in 1% being sold to keep things equal and to keep impermanent loss to a minimum. AMM's don't trade willy nilly. Each percent of coins has a specific target price point. The idea is to trade continually. NOT make as much money as fast as possible because swings in the market would incur serious impermanent loss. 

If I put my money into an amm I am expecting price fluctuations in tandem with holding each coin individually as well as the specified apy. An amm should not speculate. Even a price curve is adding speculation to the formula. Your amm should make money regardless of how the market moves. 

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Admittedly I haven't read this whole thread, but I've thought about the AMM methods and I don't tend to have a favorable opinion. They introduce a new risk, impermanent loss, and a revenue stream.

However, Orderbooks do the same thing without the additional risk. Being a MM you should be earning a spread, holding inventory of both units of value, and you have more control. 

With XRPL, you additionally have Pathfinding, which will route a TX through up to 7 hops, including both orderbooks & Rippling through other wallets.

If you set the Quality in/out on a wallet and hold 2 units of value and Rippling through your wallet is the lowest Quality path... Boom you are an AMM.

Overall what I've understood about AMMs makes me think it's Crypto's version of "if you only have a hammer, everything looks like a nail". Most non-XRPL ledgers lack the Trustline functionality & are overly focused on "trustlessness" (a fantasy concept), so these AMMs are sort of a solution that fits a round peg in a square hole.

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