Researchers from the UK Centre for Blockchain Technologies and the DLT Science Foundation recently released a paper, "Automated Market Maker on the XRPL Ledger". This research, led by Firas Dahi, Walter Hernandez, Yebo Feng, Jiahua Xu, Aanchal Malhotra, and Dr. Paolo Tasca, offers insightful findings on the XRP Ledger (XRPL) Automated Market Maker (AMM) and its performance compared to existing AMMs.

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The focus of the paper is on the XRPL-AMM, designed to address issues in traditional Ethereum-based AMMs such as high transaction fees, significant slippage, impermanent losses, and synchronisation challenges. The XRPL-AMM utilises the efficient transaction capabilities of XRPL and introduces a Continuous Auction Mechanism (CAM), aimed at improving arbitrage and price synchronisation with external markets.

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The research compares the performance of XRPL-AMM with established AMMs like Uniswap. Results show that XRPL-AMM offers advantages in reducing slippage and impermanent loss, speeding up price synchronisation, and enhancing operational efficiency. These improvements are attributed to the AMM's integration directly at the XRPL's consensus layer and protocol level, a notable difference from traditional smart contract-based AMMs.

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This integration is significant as it potentially allows faster transactions and reduced fees, beneficial for DeFi applications. The paper's comparison of XRPL-AMM with traditional AMMs is valuable for understanding the benefits of consensus layer and protocol-level implementations in the AMM space.

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In summary, this research provides a detailed comparison of the XRPL-AMM against established market players, demonstrating its potential for greater efficiency. The study represents an important step in exploring new possibilities in XRPL-based DeFi ecosystems and contributes to ongoing discussions in the DeFi sector.

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Read the paper here. 

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Read a summary by one of the authors here.

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