The XRP locked in AMM pools on the XRPL ledger has surpassed 2.2 million, leading to speculation that it could lead to a supply shock in the Ripple ecosystem.
After a bullish start, the AMM feature was hit by a bug earlier this month, leading to a mass exodus, but it has since recovered and is growing at a rapid pace.
The XRP Ledger (XRPL) continues to grow at a rapid pace, and its decentralized finance (DeFi) world is proving to be one of its cornerstones. Automated market makers (AMMs), in particular, are recording aggressive growth, with the locked XRP now exceeding 2.2 million.
AMMs are smart contracts built to provide liquidity on decentralized exchanges. They hold a pool containing two assets, say XRP and BTC, allowing users to swap them at will, with the exchange rate set by a predetermined formula. AMMs launched in the XRPL in March after a delay caused by a critical bug, as Crypto News Flash reported.
As shared by one XRPL dUNL validator on X, the growth has been phenomenal. He noted that the ecosystem now has over 300 pools and over 170 XRP pairs.
The ecosystem has grown since the revelation, and at press time, the locked XRP stood at 2.277 million. The unique tokens have also surpassed 200. GateHub’s XRP/USD pool leads the way with close to half a million locked XRP. Other major pools include Sologenic (SOLO)/XRP, BTC/XRP and XLM/XRP.
Almost immediately after launch, the AMMs took off and in a few days, they hit over 1.3 million locked XRP. However, a bug interrupted the flow and growth and led most users to withdraw their tokens from the pools. On April 7, the ecosystem hit a low of 279,000, but immediately the XRPL team fixed the bug, the ecosystem was in full swing again. On April 10, the number of locked XRP surged from 331,000 to 1.3 million XRP, a 293% increase in a day.
Could AMMs Cause an XRP Supply Shock
The locked XRP is only a small percentage of the total XRP in supply, which stands at 55.1 billion. However, the rate of growth, if sustained for weeks, can lead to substantially more tokens being locked up on the AMMs this year.
Some market commentators speculate that this could lead to a supply shock, which would lead to a price rise for the token.
Meanwhile, XRP continues to struggle on the price charts, and while it has largely traded sideways in the past day, it has shed over 20% in the past week. At press time, it trades at $0.4882. XRP’s market dip is not isolated, however, and it mirrors the likes of Solana, Cardano and Shiba Inu who have all dipped by similar margins. Others like Fantom and Uniwap have shed over 30% as the market turned bearish.
