Ripple’s CTO Develops Trading Bot with XRP Ledger’s AMM Algorithm: Key Details Shared

• David Schwartz highlighted that XRPL’s Automated Market Maker (AMM) currently has limited profits due to the high trading fees on different blockchains.
• The XRP global community will have access to the XRPL’s AMM to seamlessly trade on improved liquidity.

Ripple Labs-backed XRPL (XRP) network will be adopting an Automated Market Maker (AMM), which is akin to Uniswap (UNI) for the Ethereum (ETH) ecosystem and Pancakeswap (CAKE) for the Binance ecosystem. The XRPL’s AMM was implemented on Friday, following the overwhelming validator’s consensus earlier. 

As Crypto News Flash previously highlighted, the implementation of the XRPL’s AMM has not been without headwinds including both technical and regulatory oversight. Moreover, Ripple is currently fighting for XRP not to be classified as a security through the ongoing lawsuit.

Ripple CTO Implements Trading Bot to Leverage XRPL’s AMM

Ripple CTO David Schwartz announced on Thursday that he had successfully implemented a trading bot that taps on a similar algorithm to the XRPL’s AMM. Remarkably, the trading bot worked on centralized exchanges with different pairs including Solana (SOL), and Ethereum (ETH), thus showing the potential of the new AMM. 

Nevertheless, Schwartz highlighted that the trading bot is currently limited to a profit of about 11 percent per year due to the high transaction fees on some blockchains. As Crypto News Flash reported, the Solana network has recorded a huge number of unprocessed transactions caused by the meme coin frenzy, thus weighing heavily on the network.

It's too early to say with high confidence but it looks like it would make about 11% per year. But it's really hampered by the trading fees it has to pay. You can see from the log that it can't take advantage of smaller price movements and so misses a lot of volatility.

— David "JoelKatz" Schwartz (@JoelKatz) March 21, 2024

With the XRPL’s AMM meant for all digital assets, developers can now build similar trading bots to benefit from the low transaction fees for XRP and other assets offered by different liquidity pools. Additionally, the heightened cryptocurrency trading volume has increased the overall volatility, which is a vitality for more profits. 

Essentially, the crypto trading bots benefit from micro trades taken en mass, thus minimizing the risk of overholding a single trade and missing out on other potentially profitable setups.

Expected Impact of AMM on XRP Price Action

Amid the ongoing crypto bullish outlook, Ripple-backed XRP price is on the cusp of a major move after forming a cup with a handle based on the weekly time frame. After breaking out of the macro triangular consolidation in February this year, XRP price has signaled a historical pattern that could yield an ATH soon.

The launch of the XRPL’s AMM will ultimately have a profound impact on the XRP price as traders, including bots, can have direct access to deep liquidity. Combined with the upcoming end of the SEC vs Ripple case, which is predicted to end in a settlement due to the complexity of the case, the XRP price is well-positioned to rally exponentially in the coming quarters.

The large-cap altcoin, with a fully diluted valuation of about $62.9 billion, has gained about 20 percent since February to trade around $0.629 on Friday, March 22, 2024.