XRP Ledger Update: AMM and Clawback

Shared on Ripple's development team's official Twitter account, the company has unveiled an upcoming XRP Ledger update marked as version 1.12.0, introducing several new functionalities pending community validation.

Within this update, the XLS-30 Automated Market Maker and the XLS-39 Clawback specifications are being integrated into the network, marking significant developments. Let's delve into the details.

Exploring the Automated Market Maker

The concept of the Automated Market Maker (AMM) was initially presented by David Schwartz, Ripple's Chief Technology Officer, in collaboration with Aanchal Malhotra, Head of Research at RippleX, on July 1st, 2022.

It elucidated that the XRPL's decentralized exchange previously relied solely on manual market making and order books to provide liquidity. The proposed enhancement seeks to incorporate a non-custodial automated market maker as an inherent element of the DEX. This implementation aims to increase returns for liquidity providers in the AMM while minimizing the exposure to losses due to market volatility.

In alignment with the XLS-30 specification, the AMM is now part of the latest iteration of the XRP Ledger's server software known as "rippled."

XLS-30 is set to introduce a native Automated Market Maker to the XRPL, seamlessly integrating with the existing order book DEX. This innovation will facilitate the trading of digital assets within automated liquidity pools, expanding opportunities for DeFi stakeholders, as indicated in the announcement.

The Significance of the Clawback Feature

Described as a "lightweight addition to the rippled 1.12.0 codebase," the Clawback feature offers the ability to opt-in for the retrieval of newly issued assets through a trustline.

XLS-39 introduced this feature, and its inception can be attributed to Nik Bougalis, the former Director of Engineering at Ripple Labs, dating back to 2022.

It's crucial to emphasize that XLS-39 exclusively pertains to issued assets. Consequently, this proposed clawback mechanism does not apply to XRP.

It's worth noting that these proposed enhancements will only take effect upon receiving approval from the validating community. In order for an amendment to be adopted:

1. At least 80% of validators must express their support for the amendment by changing their vote to "yes."

2. This minimum approval threshold must be sustained for a duration of at least two weeks.