Automated Market Maker on the XRP Ledger

This research paper focuses on the testing and evaluation of the proposed XRP Ledger (XRPL)-Automated Market Maker (AMM), designed to address the limitations observed in traditional Ethereum-based Automated Market Makers (AMMs), such as high transaction fees, significant slippage, high impermanent losses, synchronization issues, and low transaction throughput. XRPL-AMM leverages the swift, cost-efficient transaction capabilities of XRPL and its unique design, featuring a Continuous Auction Mechanism (CAM) that encourages arbitrage transactions for more efficient price synchronization with external markets. Our testing and evaluation of the proposed XRPL-AMM compares its performance against established players like Uniswap. Our evaluation results reveal that the XRPL-AMM, leveraging market volatility, outperforms Uniswap in various areas, including slippage and impermanent loss reduction, the pace of price synchronization, and overall operational efficiency. Our research contributes to the growing field of Decentralized Finance (DeFi) by providing comprehensive testing results that underline XRPL-AMM's potential as a more efficient alternative to current AMMs while encouraging further exploration in XRPL-based DeFi ecosystems.