Ripple’s AMM Liquidity Pool: How XRP and RLUSD Drive Decentralized Finance Activity

In a recent X (formerly Twitter) exchange, Ripple CTO David Schwartz clarified how Automated Market Maker (AMM) liquidity pools work on the XRP Ledger in relation to the Ripple USD (RLUSD) stablecoin. This clarification addressed a user’s inquiry about AMM functionality and its impact on decentralized finance (DeFi). Specifically, Schwartz explained that these pools utilize equal amounts of RLUSD and XRP, which are traded as LP tokens. These tokens are meant to reflect an investor’s long-term XRP position and profit from price fluctuations.