“XRPL AMM facts - Must read for every $XRP holder:
• The AMM is a type of decentralized exchange and an addition to current XRPL's limit order-book DEX.
• AMMs have become the standard in DeFi and are the most popular type of DEXs and dapps, with over $2 trillion transacted among all chains. They incentivize liquidity provision and allows users to become their own banks and market makers.
• Not all AMMs are created equal on the technical side, each one has its own model and formulas, and the XRPL's AMM is introducing some unique features that other chains and AMMs don't have.
• There are 8000+ XRPL tokens and you can create a pool with any 2 tokens you like, no need for XRP.
• You always provide equal value of both assets into a pool, no matter if you do single-sided liquidity or not.
• There is no staking or earning with your XRP. You lend your assets to the AMM so others can trade them and you get paid a fee for that.
• The income comes from the trading fee that traders pay. If someone swaps $100 worth of assets and the fee in that pool is 1% then the trader pays $1 which goes to the pool and is distributed to LPs based on the share of the pool they own.
• The XRPL's AMM allows you to earn yield from market making, volatility, and the continuous auction mechanism.
• Impermanent loss (IL) is simply the opportunity cost of holding vs providing the assets to an AMM pool. The IL is not something to be afraid of and can be mitigated by fees earned. Your goal as a LP should be to provide assets you don't intend to hold, but use specifically on the AMM to earn income from the fees and trading activity.
• Not all pools are created equal, and not all pools have the same IL risk. In the case your provide liquidity into a stablecoin pair such as USD/EUR there is usually 0 to minimal IL. Same if you provide to 2 crypto with high correlation such as XRP/XLM.
• Providing liquidity to an XRP/stablecoin pair gives you less exposure to XRP's upside,but also less exposure to XRP's downside.
• You can already practice with fake money on devnet via @AnodosFinance - swap.anodos.finance and get familiar with it before going live on mainnet on March 22nd.

#xrpl #amm #xrpcommunity“