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Ripple CTO David Schwartz proudly announced on social media network Twitter/X that the XLS-30 AMM (automated market maker) Ripple was working on had finally launched on the XRP Ledger mainnet .
He also warned users to be careful when starting to trade via AMM, sharing necessary tips.
A word about AMM on XRP Ledger
In a recent blog post, RippleX developers revealed the deployment of non-custodial XLS-30 AMM in XRP Ledger, boasting that from now on, the liquidity and trading paradigm on the network will undertake a shift radical.
AMM was built for the XRPL DEX (decentralized exchange), and the new integration will generate returns for those who add liquidity to AMM. The automatic market maker also helps reduce slippage when traders are working with a long tail of tokens. Developers will be able to use XLS-30 to integrate with AMM and create their own interfaces for trading and liquidity provision.
Ripple CTO warns traders
David Schwartz has warned traders who intend to use an AMM on the DEX. He said that if they made a unilateral deposit into an AMM whose liquidity was lower than that of the deposit itself, these traders would suffer a loss in the deposit process. He also warned that if traders see significant slippage on the deposit, they should consider using other options than a unilateral deposit.
Another warning from Ripple's CTO states that a trader may also suffer a loss if their deposit is made into an AMM that was significantly unbalanced before the deposit. However, Schwartz emphasized that this should be a rare case, because if an AMM remains unbalanced for a long period of time, it means that everyone is missing an opportunity to make a profit.
Overall, according to Schwartz, the safest option is to deposit equal values of both assets traded by the AMM. If traders ultimately decide to use unilateral deposits, the AMMs they use must be “reasonably liquid.” The risk of these losses should decrease, the CTO added, as AMM pools grow and more arbitrageurs begin trading against the pools.