Ripple CTO Emergist David Schwartz recently dusted off a 2024 tweet that claimed the XRP Ledger has been a functional DEX since 2012. When pressed on whether the AMM feature is native to the XRPL, Schwartz confirmed it's a ledger-level feature, ensuring wallets fully understand interactions with both the AMM and DEX.
He explained the trade-offs. A key advantage: users avoid risky smart contracts and there are no 'owner' middlemen taxing liquidity providers. However, a current drawback is the design's optimization for volatility harvesting, which may underperform between stable assets with little price movement—think of it as a high-frequency trader stuck in a room full of statues.
The AMM provides liquidity to the XRPL's DEX, holding pools of two assets (often XRP and a token). Swaps use a mathematical formula, and the system integrates with the central limit order book to automatically find the best rate across both pools and order books.
