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Ripple Engineer Uncovers the Hidden Superpower of XRP and XRPL
A senior software engineer at Ripple has revealed a hidden feature of the XRP Ledger (XRPL) that allows users to contribute liquidity to pools without holding both required assets.
In an exciting revelation, Neil Hartner, a senior staff software engineer at Ripple, has uncovered a hidden superpower of XRP Ledger (XRPL) that could potentially revolutionize the world of decentralized finance. Hartner’s discovery revolves around the concept of single-sided deposits within XRPL’s automated market makers (AMMs).
Interesting thing I learned about the XRPL AMM. If there’s a liquidity pool for a restricted token (i.e. requires an authorized trustline) that you can’t hold, you can still provide XRP as liquidity to the pool. I don’t think this is possible with most other AMMs.
— Neil Hartner (@illneil) September 16, 2023
Enabling Liquidity ContributionsÂ
This groundbreaking innovation allows users to contribute liquidity to pools even when they are unable to hold one of the assets required for a particular pool due to restricted access. Hartner shared that as long as individuals hold one of the assets, they can perform single-sided deposits and withdrawals from the pool, limited only to assets they are authorized to hold.
Nik Bougalis, former director of engineering at Ripple, also joined the discussion, revealing that single-sided deposits were a feature he championed from the early stages of development. Bougalis expressed his satisfaction that the concept made it into the final version of XRPL’s AMM.
How does it work?
The conversation among XRP enthusiasts revolved around understanding the mechanics of single-sided deposits and withdrawals. Users sought to grasp how fees could be earned and whether the process involved automatic conversion of assets.
Hartner clarified that single-sided deposits do not require the sale of assets. Instead, they alter the pool’s asset ratio and effective exchange rate. This means that users can provide liquidity with a single asset, and any offers on the order book matching the new exchange rate will be automatically balanced by the AMM during the deposit process.
This exciting capability is not limited to XRP pools; it extends to any pool where users own one of the assets involved. It simplifies liquidity provision and enables more participants to engage in DeFi without the complex trustline requirements.