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"Ripple's USD Trading Boosted: AMMClawback Upgrade Enhances Compliance and Liquidity"

Coin WorldFriday, Jan 31, 2025 10:20 am ET

1min read

The XRP Ledger's recent upgrade, AMMClawback, has gone live, marking a significant step towards enhancing regulatory compliance and liquidity for Ripple's USD (RLUSD) trading. This upgrade introduces new guidelines for liquidity providers, particularly concerning assets that fall under stringent regulatory oversight. The AMMClawback amendment enables token providers to retrieve assets from AMM pools based on predefined conditions, preventing transactions linked with frozen assets and bolstering the network's integrity.

The AMMClawback upgrade plays a pivotal role in the functionality of RLUSD within the XRP ecosystem. By moving away from traditional order books, the update allows for more dynamic trading opportunities and enhanced liquidity provisions for RLUSD. As a result, holders of RLUSD can now reap greater rewards from liquidity pools, fostering active participation in AMM markets. This shift is expected to catalyze considerable improvements in liquidity for both XRP and RLUSD, making trades on XRPL faster, cheaper, and more secure.

The AMMClawback upgrade brings forth a set of comprehensive rules designed for both users and liquidity providers. A key aspect of these guidelines focuses on regulatory compliance; particularly, certain issuers must retain the ability to recover tokens that are distributed to users under specific circumstances. For example, if an issuer identifies that tokens were distributed to an account flagged for illicit activities, recovery mechanisms will enable the issuer to reclaim those funds, reinforcing the network's commitment to compliance and security.

The implications of the AMMClawback upgrade are notably positive for the XRP network, which has faced challenges in expanding its user base. While XRP's price has shown significant gains over the last three months, the network's engagement levels have not followed suit. The recent upgrade provides enhanced rewards for liquidity providers, potentially leading to renewed interest among market participants. This upgrade could lead to the emergence of new trading opportunities, which may bolster user engagement and adoption for XRPL.

The AMMClawback upgrade introduces various rules and guidelines for users and liquidity providers. First, for regulatory reasons, some issuers must have the ability to recover issued tokens after they are distributed to accounts. For example, if an issuer discovers that tokens were sent to an account sanctioned for illegal activity, the issuer could recover the funds. Secondly, unauthorized accounts can deposit only once if the paired asset is allowed. As such, token providers will have to use the AMMClawback function to retrieve

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