Ripple Engineer Unveils XRPL's Groundbreaking Feature: A Game-Changer for DeFi

September 17, 2023 at 08:40 PM GST 2 mins read News

Ripple engineer Neil Hartner unveils single-sided deposits on XRP Ledger, potentially transforming DeFi.
Single-sided deposits simplify liquidity provision on XRPL’s AMMs, removing the need for assets and trustline requirements.
The feature adjusts pool ratios automatically, expanding its use to various pools beyond XRP.

Neil Hartner, a senior staff software engineer at Ripple, has uncovered a transformative feature within the XRP Ledger (XRPL). This groundbreaking innovation revolves around the concept of single-sided deposits in XRPL’s automated market makers (AMMs).

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Interesting thing I learned about the XRPL AMM. If there’s a liquidity pool for a restricted token (i.e. requires an authorized trustline) that you can’t hold, you can still provide XRP as liquidity to the pool. I don’t think this is possible with most other AMMs.
— Neil Hartner (@illneil) September 16, 2023

Hartner’s discovery could revolutionize decentralized finance (DeFi) by allowing users to contribute liquidity to pools even if they don’t possess one of the assets typically required for such pools due to access restrictions. This revelation stems from the understanding that as long as users hold one of the required assets, they can engage in single-sided deposits and withdrawals from the pool, limited only to assets they are authorized to hold.

Users have been eager to understand the mechanics, particularly regarding fees and automatic asset conversion. Hartner clarified that single-sided deposits do not entail the sale of assets. Instead, they adjust the pool’s asset ratio and effective exchange rate. This means users can provide liquidity with just a single asset, and any offers on the order book matching the new exchange rate will be automatically balanced by the AMM during the deposit process.

This newfound capability isn’t limited to XRP pools alone; it extends to any pool where users possess one of the assets involved. This simplifies liquidity provision and eliminates the need for complex trustline requirements, making DeFi more accessible to more participants.

Neil Hartner’s discovery has the potential to be a game-changer in a rapidly evolving DeFi landscape, ushering in a new era of accessibility and efficiency for liquidity providers and traders on XRPL’s AMMs and beyond.

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