Locked XRP in XRPL AMM Pools Surpass 2,100,000 As XRP Supply Shock Looms

The XRP locked in XRPL AMM pools has surpassed the 2.1 million mark, triggering speculation that the automated market maker functionality could contribute to an XRP supply shock.

The XRP Ledger is evolving into a more resilient ecosystem with the integration of impactful DeFi protocols. Particularly noteworthy is the newly implemented AMM functionality, which has garnered significant interest from network participants.

However, the XRPL AMM functionality encountered an issue that halted its utility as liquidity providers redeemed and withdrew their tokens. Due to the mass withdrawal of tokens, locked XRP was reduced to 279,000 as of April 7.

Following the resolution of the bug, trading activities resumed, and a notable increase in liquidity provision was observed. Shortly after the amendment fix passed, the network recorded a surge in liquidity across multiple pools, with total XRP locked crossing 820K in a few hours, The Crypto Basic learned.

XRPL AMM Pools Boast 2M+ Locked XRP

In the most recent disclosure, XRPL dUNL validator Vet confirmed that this figure has now surpassed the 2.1 million mark a mere four days after the amendment fix. At the time of the disclosure, the network saw exactly 2,121,475 XRP locked in AMM pools.

XRP Ledger Automated Market Maker reached 2.1M XRP locked liquidity 🤗

Most noticeable:
Over 300 pools and 179 XRP pairs !

Nr.1 Pool is the XRP/USDC (GH) pic.twitter.com/LcKzR7REcT

— Vet 🏴‍☠️ (@Vet_X0) April 15, 2024

However, the latest data from XRPL explorer XRPScan indicates that this figure has now increased to 2,175,911 XRP, suggesting that network participants have locked in an additional 54,000 XRP within nine hours. The value of the total XRP locked currently stands at $1.05 million against prevailing rates.

XRP Locked in XRPL AMM Pools | XRPScan

On-chain data further confirms that the XRPL now accommodates 317 active AMM pools, with 180 of them holding XRP. The 2.17 million XRP are locked across these 180 active pools, with the USDC/XRP pool boasting the largest volume at 473,174 XRP.

A Looming XRP Supply Shock?

Despite the low amount of XRP locked in these pools, representing just 0.0039% of circulating supply, market commentators have argued that the AMM functionality could in fact contribute to a looming XRP supply shock. Zach Rector, a media personality, has championed this narrative.

Supply Shock dynamics for XRP coming into play…

2 Million XRP in AMM pools already

— Zach Rector (@ZachRector7) April 15, 2024

For context, a supply shock is a sudden, significant change in an asset’s available supply, impacting its scarcity and potentially influencing its price trajectory. However, the amount of XRP locked in these XRPL AMM pools is too insignificant to trigger any supply shock.

Notwithstanding this fact, the rate at which the locked tokens have increased triggers optimism that these AMM pools could gulp a much larger portion of XRP’s circulating supply in the next few years as adoption skyrockets. Rector believes this duration could be five to ten years.

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