DEV Community: 𝙳𝚊𝚟𝚒𝚍 𝚂𝚌𝚑𝚠𝚊𝚛𝚝𝚣

XRPL Feature Spotlight: The Power of Auto-Bridging

𝙳𝚊𝚟𝚒𝚍 𝚂𝚌𝚑𝚠𝚊𝚛𝚝𝚣 — Wed, 03 Apr 2024 17:29:57 +0000

In the world of on-chain finance, liquidity is key! The XRP Ledger (XRPL) was built for DeFi use cases to enable a seamless flow of value transfer across multiple currencies or assets. However, in order to achieve efficient cross-asset transactions, it required solving the challenge of fragmented liquidity pools. In some cases, asset pairs involving less commonly used assets lacked direct liquidity to enable efficient exchange. It's like having Euros in the United States, but not being able to find a currency exchange to get USD.

This led to the inception of the auto-bridging feature on the XRPL decentralized exchange (DEX). The XRPL DEX is built directly into the protocol providing on-chain liquidity for numerous currency pairs. Native functionality such as auto-bridging allows asset transfers to the XRPL to access the DEX’s existing liquidity to create synthetic order books for assets.

Auto-bridging: XRP as the native and universal bridge currency on the XRPL

While not new to the XRPL, auto-bridging is a unique feature on the DEX that utilizes XRP as the native currency to facilitate trades between any two assets on the Ledger. As the native currency on XRPL, XRP inherently is counterparty free. Auto-bridging capitalizes on this by automatically considering XRP as a bridge currency to find the most efficient trading route across assets.

One of the key use cases for auto-bridging is enabling efficient trading of stablecoins on the XRPL. Stablecoins, which are designed to minimize volatility by being pegged to a stable asset like the US dollar, are crucial for many DeFi applications.

Hypothetically, let's say you want to buy a EUR stablecoin using a USD stablecoin, but there isn't a large direct market between the two. Auto-bridging allows your trade to tap into liquidity from other markets by automatically finding the most efficient path for your trade, which could leverage XRP or other assets as bridge currencies. For example, depending on the market dynamics when you want to make the transaction, the feature could execute your USD-EUR trade by first converting USD to XRP, and then XRP to EUR.

Auto-bridging also enables market makers on the XRPL's DEX to more easily scale their activity. By providing liquidity for N XRP pairs, market makers can effectively serve liquidity for the order of N^2 pairs through the synthetic combinations created by auto-bridging. If they take advantage of that technique to make markets, they can scale to cover more currency combinations on the DEX.

Synergies with the AMM

Auto-bridging works in conjunction with the XRPL's Automated Market Maker (AMM) function that just went live on XRPL mainnet. When an AMM trade occurs on the XRPL, it can create new trading offers that are compatible with the auto-bridging feature. This means that the auto-bridging function can take into account these newly created offers when processing trades.

The interaction between AMMs and auto-bridging is complementary, with each function supporting the other. The presence of AMMs on the XRPL can potentially increase the number of trading offers available for auto-bridging to consider. Conversely, the auto-bridging feature can help AMMs by providing access to a wider range of liquidity across the network.

As more assets and applications are added to the XRPL, and with the growing use of AMMs, auto-bridging will play an important role in supporting the overall functionality and interoperability of the ecosystem. The synergy between these two features showcases the unique design of the XRPL in enabling a composable and efficient DeFi environment.

Optimizing Liquidity Across the Ecosystem

Auto-bridging is a powerful innovation that addresses a key challenge in decentralized trading– the lack of liquidity in many asset pairs. As blockchain technology enables the tokenization of an increasingly diverse range of assets, the number of tradable asset pairs grows exponentially. This leads to an operational challenge in managing liquidity across all these pairs and combinations, resulting in fragmented liquidity pools. This innovative feature helps to optimize liquidity across the entire ecosystem, making decentralized trading more efficient and accessible.

Auto-bridging solves this issue by enabling XRP to serve as an automatic bridge currency between any two assets on the XRP Ledger, regardless of the direct liquidity between them.

As more assets and applications are added to the XRPL and the introduction of AMMs, auto-bridging will play a role in ensuring a liquid and an efficient market. It showcases the unique strengths of the XRPL in enabling a truly interoperable and composable DeFi ecosystem.

XLS-30 Live on Mainnet: AMM Integration on XRP Ledger is Here

𝙳𝚊𝚟𝚒𝚍 𝚂𝚌𝚑𝚠𝚊𝚛𝚝𝚣 — Fri, 22 Mar 2024 20:19:16 +0000

The integration of the Automated Market Maker (AMM) into the XRP Ledger (XRPL) has finally arrived, bringing with it a new paradigm for liquidity and trading on the network. The XRPL decentralized exchange (DEX) currently provides liquidity exclusively by manual market making and central limit order books. The all-new integration adds a non-custodial AMM as a native feature to the XRPL DEX, which offers an opportunity to earn returns to those who provide liquidity to the AMM and decreases slippage when trading the long tail of tokens.

While XLS-30 represents a significant moment and a landmark in the XRP Ledger’s evolution, it is also only an initial step towards bolstering the broader DeFi ecosystem. Designed as a native protocol, XLS-30 allows developers to integrate with the AMM and establish their own trading and liquidity provision interfaces. Ultimately, the success of XLS-30 will be determined by the broader ecosystem and the readiness of DeFi leaders in the space to attract liquidity and utilize the new functionality. The excitement is certainly building.

What is an Automated Market Maker?

At its heart, the AMM model on the XRPL is designed to facilitate automatic trading and liquidity provision without the need for traditional order books. This is achieved through the creation of liquidity pools for pairs of assets, where the price of assets is determined algorithmically based on the ratio of the assets in the pool. This model is crucial for ensuring constant liquidity and more stable prices, particularly for pairs that might not have a large volume of direct market trades.

Core Features of the AMM Integration on XRPL

- Protocol Native: As a core primitive of the XRPL, developers can utilize AMM functionality without the need to create their own smart contracts and face associated risks.

- Aggregated Liquidity: Liquidity for all trading pairs is aggregated at the protocol layer, rather than fragmented or siloed across individual smart contracts.

- Continuous Auction Mechanism: The implementation of a continuous auction mechanism allows arbitrageurs to bid to capture price discrepancies at a discount. The AMM continuously auctions trading advantages for 24-hour periods at near zero trading fees. This results in immediate arb trading and maintains stable volatility. Proceeds from each auction are partially refunded to the prior arbitrage slot holder and partially burnt, effectively reducing impermanent loss for liquidity providers.

- Single-sided Liquidity Provision: Only a single asset is required to contribute to a pool, decreasing the required number of steps for users to contribute liquidity.

- No Miner Extractable Value (MEV): The XRPL uses federated consensus, meaning that each ledger (equivalent to a “block”) is determined by a consensus of participants whereby no single party can dictate which transactions or ledgers are valid. There are no miners to prioritize only certain transactions (namely higher gas fee orders) to the Ledger. The AMM’s (and existing DEX) orders inherit the core ledger’s deterministic-random transaction ordering secured by the distributed network of validators. While it does not eliminate the ability to front run transactions, it does become more difficult compared to an open mem pool.

- CLOB DEX Integration: The AMM is integrated with the central limit order book (CLOB)-based DEX and enables price optimization to determine whether swapping within a liquidity pool, through the order book, or both provides the best rate and executes accordingly. This ensures that transactions can automatically use the most efficient path for trades, whether through offers on the DEX or through AMM pools, optimizing for the best possible exchange rates thereby enhancing DEX liquidity.

The core transactions of XRPL AMM protocol:

AMMCreate: Enables the creation of a new AMM instance, initializing it with funding and defining the asset pair.
AMMDeposit: Allows users to add liquidity to an existing AMM, receiving LP (Liquidity Provider) Tokens in proportion to their contribution.
AMMWithdraw: Crypto Liquidity Providers (LPs) can withdraw their funds from the AMM, surrendering their LP Tokens and receiving their share of the assets back.
AMMBid: Users bid on the AMM’s auction slot, aiming for discounted trading fees.
AMMVote: Enables LPs to vote on the trading fee percentage, influencing the economics of the AMM pool.

LP Tokens and Governance

LP Tokens play a central role in the AMM ecosystem, representing the liquidity provider's share in the pool. These tokens are not just pool ownership shares but also grant holders a say on key parameters of the AMM, such as trading fees. This feature introduces a layer of decentralized governance, allowing for a dynamic and community-driven approach to managing the pools.

Building with AMM on XRPL: A Step by Step Guide

Step 1: Setting Up Your Development Environment
To start building with AMM functionality, developers should first set up their development environment by integrating with the xrpl.js, xrpl-py, or xrpl4j libraries. These libraries have been updated to support AMM transactions and provide a solid foundation for interacting with the XRPL's AMM features.

Step 2: Creating and Managing AMM Pools
Developers can create AMM pools for any pair of assets on the XRPL by executing the AMMCreate transaction. This involves specifying the asset pair and providing initial liquidity. Once a pool is established, it can be managed through additional transactions like AMMDeposit and AMMWithdraw, allowing for a dynamic and responsive liquidity environment.

Step 3: Engaging with the Community for Feedback and Improvement
As the AMM functionality is novel and complex, engaging with the XRPL community for feedback, bug reports, and suggestions is crucial. The XRPL Developers Discord channel and forums are excellent platforms for collaboration, offering a space for developers to share insights, ask questions, and contribute to the ongoing refinement of the AMM feature.

Use Cases and Applications

Financial Applications
The integration of the AMM on XRPL opens up exciting possibilities for financial applications. Developers can create DeFi services like trading platforms, yield farming applications, and more that leverage the efficiency and liquidity of AMM pools. The ability to easily swap assets and provide liquidity directly on the ledger enhances user experiences and can drive adoption of a variety of services.

Non-Financial Integrations
Beyond financial applications, the AMM functionality can enhance non-financial XRPL applications by simplifying transactions that involve asset exchanges. For example, platforms offering NFTs or other digital goods can integrate AMM to facilitate seamless asset swaps, improving the user journey and expanding the use cases for their offerings.

Getting Started and Resources

Access the most up-to-date technical documentation to get started, including comprehensive guides, API references, and tutorials on AMM and other XRP Ledger features. Additionally, the Livenet XRPL Explorer allows developers to view real-time data on AMM pools, transactions, and more, offering valuable insights for development and analysis.

The AMM integration marks a significant moment in the evolution of the XRP Ledger, introducing a robust mechanism for liquidity and trading that aligns with the principles of decentralized finance. As developers explore and innovate within this new framework, the potential for creating impactful and user-friendly DeFi applications on the ledger is immense. The journey ahead is an exciting one, with the AMM feature laying the groundwork for a vibrant ecosystem of financial innovation on XRP Ledger.

RippleX 2024: A Visionary Outlook into the Future of Blockchain

𝙳𝚊𝚟𝚒𝚍 𝚂𝚌𝚑𝚠𝚊𝚛𝚝𝚣 — Tue, 19 Dec 2023 23:37:09 +0000

As the year draws to a close, RippleX stands at the forefront of innovation, ready to propel the blockchain industry into new realms of possibility. For those that are familiar with Block Stars, you’ll know how fond I am of asking our guests to cast their eyes on a crystal ball and tell us what lies ahead. As we approach the New Year, I’ve decided to set my own predictions and tapped into the minds of some of our leading experts, SVP Markus Infanger, and Head of Research Aanchal Malhotra, to bring you a glimpse into the future of blockchain technology.

Industry sentiment is visibly shifting with excitement building and many left wondering what exactly the future holds. With the dawn of Artificial Intelligence establishing itself as an important checkpoint in the tech industry over the past year, Real World Assets becoming a significant focus for adoption, and security remaining a key concern, there’s a lot of ground to cover.

Convergence of AI and Blockchain
Many of us have already begun to experiment with AI in a myriad of ways, exploring and learning what impact it may have on our personal and professional lives. For those of us involved in blockchain, we are wondering what possibilities lay ahead through the convergence of AI and blockchain technology. I believe this convergence could be set to transform how we approach cybersecurity and financial services. With security a key concern for many builders in the space, AI will simplify the building experience on the blockchain. AI will be pivotal in making blockchains safer and more reliable, effectively guarding against cyber threats. Its innovative capabilities could go on to revolutionize the finance industry on-chain, offering accurate market insights, automated trading and even potentially offering tailored financial advice.

It’s good news for the builders who have been working round the clock. Tools such as AI chatbots will enable developers to quickly receive answers to their queries, speeding up the process from concept to application. AI Chatbots have already become a part of RippleX’s commitment to making blockchain development on the XRP Ledger more accessible and less time-consuming, especially for those new to the field. This approach will not only foster increased innovation on blockchains but could also enhance financial inclusion, making tools more accessible globally.

Stablecoins: Revolutionizing the Currency Landscape
Stablecoins could be set to dramatically reshape global finance, creating new foreign exchange corridors and reducing dependence on the US Dollar. I see this transformation perhaps being most evident in the Middle East, where countries will increasingly use stablecoins to settle regional trades. On the whole, this shift could reduce traditional currency dependencies, fostering a more diversified and resilient financial ecosystem.

The consequences will mean that financial institutions will actively work towards standardization to seamlessly integrate with blockchains. This initiative will enable a smoother interface between traditional financial systems and the emerging digital economy, paving the way for stablecoins to become a universal tool in global trade and finance. This evolution will not only streamline international transactions but also unlock new economic potentials, setting a precedent for how digital currencies can coexist with and enhance traditional financial infrastructures.

Markus Infanger’s Strategic Insights: Unleashing the Power of Tokenization and Real World Assets

As the industry has continued to grow, RWAs have remained somewhat of a buzzword, leading many to believe that it is simply a trend for investors to speculate on. I disagree, RWAs are a driving force of the blockchain economy with real estate, commodities, treasuries and bonds being the leading use cases. My estimation is that centralized lending platforms will increasingly use tokenized RWAs for collateralized loans, enhancing lending with increased security and efficiency.

As the industry improves in terms of interoperability among blockchains, we may well see smoother transactions and better liquidity for these tokenized assets. The most significant impact of this will be seen by institutional adoption of RWA tokenization. This shift could see the merging of traditional finance with blockchain technology, attracting new investment and reshaping the financial sector. XRP Ledger will be a leading blockchain that will enable these use cases and streamline transactions, enhance transparency, and increase access to these critical markets.

With over 20 years in banking and leading global teams in Foreign Exchange, I reached out to my colleague Markus Infanger, SVP at RippleX, for his view on what lies ahead for RWAs and institutional adoption. Markus outlined his belief that we will see new infrastructure focusing on backward integration with legacy financial institutions, helping drive change management and increasing adoption of blockchain.

For example, Markus sees the expanding use of smart contracts and tokenization on XRPL and other blockchains being key. The tokenizing of conventional assets such as bonds, equities, real estate, funds, and various financial products may be the use cases which allow for traditional finance to tap into crypto technologies.

Markus sees innovative DeFi solutions ensuring compliance such as zero-knowledge proofs as being particularly important. This strategic approach not only ensures compliance but establishes a foundation for sustained operational resilience in the face of regulatory change.

Interestingly, Markus also believes that on-chain money market products will see a big surge. According to crypto research site 21.co, the market value of tokenized U.S. Treasuries increased nearly six-fold since Jan 2023 jumping sixfold from 104mn USD to 675mn USD. Indeed by the end of 2024, Markus predicts that tokenized treasuries could reach $5 billion, as more businesses recognize the value of transforming physical assets into digital tokens. Yes, you read that correctly. For Markus, this shift could unlock significant liquidity, and open up new avenues for investment and asset management.

Aanchal Malhotra’s View From the Research Room

As the Head of Research at RippleX, Aanchal plays a crucial role in shaping the team’s understanding of emerging technologies. In her role, she drives various company-wide initiatives and collaborates on technical papers aimed at introducing native support for non-fungible tokens (NFTs), Automated Market Maker (AMM), and Decentralized Identity (DID) on XRPL.

Dawn of Decentralized Identity (DID)
The adoption of Decentralized Identity (DID) is something myself, Aanchal and the broader RippleX team are especially passionate about, with its potential to revolutionize individual privacy and security on the blockchain and stimulate an increase in institutional volume on Decentralized Exchanges (DEXes).

In my view DIDs will become the gold standard for secure and sovereign identity verification. This may well see institutions will gravitate towards DEXes, drawn by their superior security and transparency. This shift could mark a pivotal moment for the financial industry as DIDs empower institutions to engage in decentralized finance (DeFi) with greater confidence and control, thereby fueling growth and liquidity in DEXes. This integration of DID with institutional operations will mark a new era in blockchain, merging privacy, security, and financial innovation. RippleX is excited to contribute to this development by introducing DID capabilities to the XRP Ledger, as outlined in its proposed XLS-40 amendment.

Interoperability & Smart Contract Capabilities
Interoperability is already something many in the industry have begun to yearn for and understand to be a necessity for progress. By 2024 and beyond, the advancement of blockchain interoperability protocols will mark a major shift by breaking down the existing silos between different blockchains. This shift will enable diverse blockchain platforms to seamlessly interact by sharing data and value transfer, creating a unified and more efficient blockchain ecosystem.

The role of interoperability protocols will be crucial in this transformation, as they will increase innovation, as well as foster new applications and use cases, specifically in DeFi. The outcome will enable a more accessible, robust, and interconnected blockchain landscape, driving mainstream adoption and unlocking the full potential of blockchain technology across various industries.

The team at RippleX are particularly excited about the proposed Cross-Chain bridge amendment for the XRP Ledger which will head into the voting process next year. Another point of excitement which is enabled by the Cross-Chain bridge is the XRP Ledger EVM compatible sidechain. The EVM compatible sidechain marks an intriguing development, offering a bridge between the XRP Ledger and the Ethereum ecosystem. You can learn more about this in our recent Block Stars episode below.

The Future of Zero Knowledge Proofs (ZKPs) and Succinct Non-Interactive Arguments of Knowledge (SNARKS)

For Aanchal it is already clear that ZKPs and SNARKS will also gain mainstream recognition as essential components of blockchain technology. Their adoption will become a standard practice in blockchain projects, showcasing their versatility in addressing scalability, interoperability and privacy challenges, she outlines. Aanchal believes that the future of these two components in three hugely important areas:

Improved Scalability: The succinct nature of SNARKs will be harnessed to improve transaction throughput and reduce computational overhead. This breakthrough will be particularly crucial for financial institutions handling large volumes of transactions, paving the way for more efficient and scalable blockchain networks that meet the demands of institutional-grade financial processes.

Cross-Chain Interoperability: The integration of ZKPs and SNARKs will drive significant progress in cross-chain interoperability, enabling secure, private, and compliant communication across diverse blockchain networks. This enhanced interoperability fosters a more interconnected financial ecosystem, allowing institutions to leverage different blockchain platforms while upholding privacy and security standards.

Pro-Compliance privacy: In the financial blockchain realm, ZKPs and SNARKs will take center stage to enhance compliance without compromising privacy. These cryptographic tools will address regulatory concerns, enabling financial institutions to actively participate while maintaining compliance standards.

The stage is set for a transformative year for RippleX in 2024. These predictions from our experts showcase the team’s excitement for what lays ahead. Stay tuned as we embark on a journey to shape the future of the industry, RippleX is not solely predicting the future, the team is creating it.

Six Months on Mainnet: The Growth of NFTs and Tokenization on the XRP Ledger

𝙳𝚊𝚟𝚒𝚍 𝚂𝚌𝚑𝚠𝚊𝚛𝚝𝚣 — Mon, 15 May 2023 19:33:30 +0000

It’s been six months since XLS-20 went live on mainnet, bringing native NFT functionality to the XRP Ledger. And since the amendment was proposed, voted on and approved by the validator community, the XRP Ledger developer and creator ecosystem has been thriving with new projects, use cases and collections coming to life on the XRPL.

Since mainnet launch, over 1.3M NFTs have been minted and over 740k offers to buy NFTs accepted, making the XRP Ledger among the top 10 blockchains for NFT sales volume and transactions. The top 3 natively built marketplaces by XRP volume—OnXRP, Sologenic, and xrp.cafe—account for over 80% of total NFT transactions on the Ledger. In addition, there are over 5,000 total issuers and hundreds of NFT collections spanning use cases from events and ticketing; to music and IP access rights; to metaverse and loyalty rewards; to real estate and beyond. The top three NFT collections by total lifetime sales volume (including IOUs) are XPUNKS, Bored Apes XRP and The Bearable Bulls.

Tokenization Infrastructure and Tooling

In addition to NFT projects, infrastructure apps and tools are being developed on the XRPL to bring additional resources and support to the developer community. This includes capabilities like:

XUMM: A non-custodial wallet that allows users to interact with the XRPL, third party tools, multiple accounts and tokens while keeping private keys safe and secure. The XUMM platform enables developer and community interaction, as well as multiple retail payments use cases like micropayments, loyalty points, and more.
Bithomp: A go-to block explorer for the XRPL developer community. Bithomp has a robust interface for NFT owners to visualize and browse NFT data on the XRPL.
Supermojo: Partners with creators, marketplaces and brands to enable easy payments, minting and secure wallet storage.
XRPSCAN: A leading block explorer for the XRPL, providing advanced metrics, search, account summary, and amendment data and updates for the developer community.
GemWallet: A crypto wallet and web extension that enables fast, secure payments on the XRP Ledger, with an upcoming release to provide NFT support.

Tokenized Real World Assets Coming to XRPL

Going beyond art and collectibles, the community is constantly unlocking new use cases for the real-world utility of NFTs and tokenization. Among those includes the tokenization of real world assets (RWAs) like digital currencies, real estate, financial assets, identity, and more.

With proper regulatory approvals and licensing in place, developers, startups and entrepreneurs can build businesses around tokenized assets leveraging the power of the XRP Ledger. A few upcoming and recently launched integrations for tokenized RWAs include:

Sologenic: Provides a global platform for on-demand tokenization of digital securities, including stocks, ETFs and commodities. Users can access the Sologenic DEX, NFT marketplace, or tokenize and trade assets with both traditional financial and crypto markets.
STASIS: Issues the world’s largest euro-backed stablecoin and integrates with the XRPL to provide easy on/off ramps for developers, institutions and consumers.
Fractal ID: Digital identity technology that enables compliance processes like KYC and AML. Their integration with the XRPL will enable participants in the ecosystem to onboard and move seamlessly across dApps, leading to a better experience for all developers and their end users.
Stably: Web3 payment infrastructure provider that issues its USDS stablecoin on the XRPL. Stably enables individuals and businesses from 200+ countries to mint and redeem USDS on the XRPL.
Thallo: A web3 climate startup that is building a blockchain-based marketplace for voluntary carbon credits on the XRPL, connecting carbon credits buyers and sellers. Thallo is democratizing and providing access to tokenized carbon credits to help companies achieve sustainability targets.

Get Started with your Next Tokenization Project

With pre-programmed NFT functionalities, built-in royalties, and no smart contracts, developers and creators of all levels can benefit from the XRP Ledger’s high speed, low gas fees, security and stability—all of which make minting and burning NFTs and other tokenized assets on the XRPL easy and frictionless.

By leveraging open-source repos on Github, the XRP Ledger Learning Portal, updated documentation and community programs like XRPL Grants, Accelerator and Bounties, new projects and use cases for tokenization, web3 and finance are coming to life on the XRPL.

Get started coding in the languages you already know, or join the XRPL developer discord for future updates and to connect with the community.

XRP Ledger NFTs are Here

𝙳𝚊𝚟𝚒𝚍 𝚂𝚌𝚑𝚠𝚊𝚛𝚝𝚣 — Mon, 31 Oct 2022 20:52:02 +0000

Last year, we proposed an ambitious goal to the XRPL community: bring NFTs to the XRP Ledger.

Since then, RippleX engineers and members of the XRPL community have conducted extensive performance testing, identified bugs (and fixes), and iterated on our vision to enhance on-ledger support for NFTs and XRPL stability.

Thanks to this collective effort, XLS-20 is enabled on the XRP Ledger Mainnet.

XLS-20 (the standard for XRPL NFTs) presents a considerable milestone for developers and builders utilizing the XRPL for their NFT projects and apps. The new standard introduces native non-fungible tokens (NFTs) on the XRP Ledger to represent assets that are each unique along with operations to enumerate, transfer and hold such tokens. What makes this all possible is, of course, the ledger’s built-in tokenization functionality and performance advantages.

XRP Ledger NFTs: Benefits and Design

Blockchains are hard to change for very good reasons. RippleX engineers took time to build the right standard with a no-smart-contracts approach, making NFTs on the XRPL less vulnerable (e.g. bridge hacks), less congested and less expensive than other chains.

XRP Ledger NFTs were also designed with efficiency in mind. Significant transaction expenses are a fundamental problem for developers minting NFTs on leading layer-1 blockchain solutions. Gas fees alone on some chains can add hundreds of dollars to the final price of an NFT and vary based on a given network’s user traffic and congestion. With XLS-20, developers can support more NFTs at lower cost and do things like leverage auction functionality and an efficient storage mechanism, direct a cut of secondary sales to the original minter on the XRPL, or even co-own NFTs.

NFTs on the XRPL also include automatic royalties which standardize royalty enforcement thanks to the ledger’s built-in DEX. (This is a huge benefit compared to passing through different exchanges with different rule sets.) For creators, NFT transfer fees provide them a share of the revenue when the NFT is bought and sold. They can also designate a third party who mints and sells the tokens on their behalf.

With on-ledger NFTs, the XRP Ledger is an attractive destination for developers to build new NFT applications that support minting, burning and trading at scale.

By and For the Community

Making XLS-20 activation a reality could not have been possible without the explosive demand from all of you. RippleX may have proposed the XLS-20 standard, but developers from around the world directly informed the future of NFTs on XRPL community channels like Github (more than 200 comments and nearly 100 issues raised), Discord and Mattermost.

Developers like MikeCheckYaSelf were instrumental in identifying a critical bug in the XLS-20 amendment code and inspiring the design—which aims to make it easier for developers to access XRPL functionality without needing to build or maintain complex smart contracts. Beyond that, we focused on addressing developer pain points throughout the entire NFT journey by introducing dev toolings such as robust documentation, efficient on-chain storage, library support and more.

Meanwhile, community projects like xDude, Pixel Ape Rowboat Club (PARC), X-Tokenize and XRP Junkies (to name a few) are proof of the excitement and NFT use cases made possible with the XRPL’s low transaction cost and high transaction volume.

After formally proposing the amendment for voting via the XRP Ledger’s on-ledger voting mechanism, the writing on the wall was clear. XLS-20 truly has the potential to cement the XRPL as the chain of choice for unlocking functional NFT utility. It’s finally happening, and there’s no denying the opportunity (and continuous improvements and iterations) ahead.

In Full Transparency

Because of the XRP Ledger’s decentralized nature, no singular authority can make decisions for the network. Instead, network changes are determined by its participants, who vote on behalf of the XRP Ledger’s best interest. Some participants even initially voted “no” on XLS-20, urging all to do their due diligence and ultimately ensuring a battle-tested amendment ready for 2022 and beyond.

And rightfully so (as I said, we took a lot of time to ensure we got this right). In full transparency, XRPL NFTs have the potential to cause a temporary increase in traffic on the XRP Ledger network. While we’ve conducted extensive performance testing and remain confident in the XRP Ledger’s stability, efficiency and security, the road to enabling native NFT support has been long. Some community members like Alloy Networks voiced concerns about minting NFTs and converting large collections of NFTs all at once.

Other concerns included outages of individual XRP Ledger servers or increased transaction costs due to network load. It’s also worth noting that NFT objects are incredibly lightweight, with transactions designed for maximum flexibility with minimal overhead. So devs are cautioned to be mindful of scalability when deploying native NFTs.

Despite these initial concerns, this healthy skepticism and dedication to the XRPL’s well-being make me confident that the network can handle the long-term effects of NFTs at scale.

What’s Next and How To Start Building Today

We are excited about what lies ahead for this next chapter of the XRP Ledger. (Spoiler: even more libraries and enhancements to tokenizing assets on the XRP Ledger coming soon.) Through continuous iterating and collaboration, we can create the tipping point for mainstream blockchain adoption by unlocking real NFT utility.

On behalf of RippleX engineers and me personally, I want to thank the XRPL community for your work, patience and support in making native NFTs on the XRP Ledger a reality.

I invite and encourage you all to ask questions, learn and build applications, tooling and solutions that further enhance tokenization on the XRP Ledger. You can learn about NFTs on Youtube or get started on XRPL.org.

Behind the Scenes of the XRPL DEX

𝙳𝚊𝚟𝚒𝚍 𝚂𝚌𝚑𝚠𝚊𝚛𝚝𝚣 — Thu, 23 Jun 2022 20:11:41 +0000

If liquidity is the lifeblood of crypto, then the decentralized exchange (DEX) is the beating heart at the center of the XRP Ledger (XRPL)—pumping fast, low-cost and expansive liquidity throughout the network.

The world’s first established decentralized exchange, the XRPL DEX enables anyone on the ledger to directly and efficiently buy, sell or trade any asset—including stablecoins, XRP, other digital assets and physical units of value like gold—without using an intermediary such as a bank or other financial institution.

Powerful Matching Engine

In the simplest of terms, the XRPL DEX is a central limit order book.

Sellers set prices for assets, buyers issue purchase orders, and the DEX matches the two to finalize transactions. Because there is no central party, all orders are treated equally and fairly, giving every participant the same rate, thus, the same opportunity.

But the DEX also has a superpower: its ability to automatically find a currency or token pair—either directly or by using the XRP Ledger’s native XRP as a bridge currency—at the lowest possible price. For example, if someone issues a non-fungible token (NFT) for sale in U.S. dollars (USD) but the buyer wants to purchase it using Korean won (KRW), the DEX automatically charts the least expensive trading path between the two currencies—for example, from KRW to XRP and then to USD.

This capability is rooted in two core features of the DEX: pathfinding and auto-bridging.

As the name implies, pathfinding is the ability to hop between currency pairs with the most liquidity—essentially finding a path from the seller to the buyer—through the exchange from the unit of value on one end of the transaction to the other. This also provides a powerful cross-currency payment capability where XRPL users can pay with any asset, deliver any asset to the recipient and use combinations of paths to provide a better exchange rate.

Auto-bridging is the use of XRP as an intermediary to connect the order books of two different currencies or tokens at the lowest cost. This is useful when executing an exchange in which one currency pair does not have enough liquidity to transact at competitive rates.

Key Benefits of the XRPL DEX

Most other ledgers lack a built-in decentralized exchange, making the symbiotic relationship between the DEX and XRPL both rare and powerful. Users and developers alike gain from the combined advantages of the XRPL DEX when executing transactions, managing decentralized finance (DeFi) applications and more.

In particular, the DEX benefits from the XRPL’s inherent advantages of speed, cost and sustainability. Transactions are executed within 3-5 seconds at a high throughput (1,500 transactions per second) and at only a few cents per transaction—placing and matching orders on the DEX can be executed in seconds and at low costs as well. The use of order books to provide high liquidity is only practical due to these low costs, low latency and high throughput.

The XRPL is also carbon-neutral and uses a validation and security algorithm called Federated Consensus which is more energy-efficient than proof-of-work blockchains. This removes the possibility of Miner Extractable Value (MEV) due to the consensus mechanism. Moreover, XRP Ledger uses a shuffle algorithm to create a deterministic, pseudo-randomly ordered list of transactions, thus it is difficult for participants to front-run transactions.

Crucially, the XRPL creates its own virtuous circle of liquidity by allowing anyone to issue a token. An increasing number of tokens representing currencies, valuable metals and more all translate into more available assets for trading on the XRPL’s native DEX. In turn, the more than 5,400 tokens traded or issued on the XRPL DEX to-date helps to increase the overall utility of the DEX, leading to the issuance of even more tokens.

Beyond its ease of use and custom tokenization advantages, developers also benefit from a robust and active community within the overall XRPL ecosystem.

How to Access the XRPL DEX

With the XRPL DEX, users can exchange tokens for XRP or other tokens*, with minimal fees. Getting started is simple: users need only connect their XRP wallet—whether a “hot” wallet like XUMM or a “cold” wallet like Ledger—to the XRPL DEX.

Interested traders can find XRPL gateways that support their assets or create their own gateway. Current gateways -- businesses that provide a means for moving value in and out of the XRP Ledger and to the XRPL DEX -- include Sologenic, onXRP, and GateHub, as well as a number of other direct integrations.

The Future of the DEX

Ripple, as one contributor to the XRPL developer community, continues to introduce feature and performance enhancements to the DEX. Currently, Ripple engineers are designing a proposal for a native automated market maker (AMM) that would allow for fast, low-cost token swaps and lower impermanent loss through a novel auction mechanism. A unique AMM implementation could also allow those who provide liquidity for AMMs to yield a large share of the profits that are normally taken by arbitrageurs—in addition to returns earned from trading fees. If implemented, liquidity providers and traders alike can benefit from more customizable orders, better pricing by liquidity aggregation across different DEXes and a better user experience.^*

Ultimately, these changes could help the XRPL leapfrog other DEXes and enhance the enormous advantages the XRPL DEX already offers to traders, liquidity providers and developers. But whether today or tomorrow, the DEX will always deliver on the promise of fast, affordable liquidity.

Developers should review the appropriate documentation to learn how to begin building on top of the DEX.

^{* Subject to applicable laws and regulations}