XRP Liquidity Stalls as XRPL AMM Pools Multiply

The XRP ecosystem is witnessing an intriguing paradox: while the number of liquidity pools on the XRP Ledger’s automated market maker (AMM) platform continues to skyrocket, actual XRP liquidity within these pools remains flat. As of May 7, 2025, XRPL statistics show nearly 19,782 AMM pools, but the collective XRP liquidity has stagnated around 13.39 million XRP—a level it’s held since the beginning of the year.

This lag in capital inflow, despite the visible growth in infrastructure, has triggered conversations within the XRPL community. One of the leading voices, Panos Mekras, co-founder of Anodos Finance, pointed out this concerning trend on X (formerly Twitter), highlighting the imbalance between increasing token and pool numbers versus meaningful XRP engagement.

Focus on Asset Quality Over Pool Quantity

Mekras attributes the current dysfunction to the influx of low-value tokens. He explained that the rapid expansion of liquidity pools is being driven not by demand for XRP but by an oversupply of tokens that may offer limited utility. These assets are not attracting significant capital but are instead redistributing what little liquidity exists—ultimately diluting the overall effectiveness of XRPL’s AMM ecosystem.

His proposed solution? Elevate the quality of assets being introduced into the XRPL. Mekras called for the addition of well-established stablecoins and real-world assets (RWAs), asserting that quality assets would attract more sustained interest and liquidity. Furthermore, he stressed the need for platforms capable of improving the way both users and developers onboard and interact with XRPL’s AMM, helping foster stronger value propositions and better usability.

Pool Composition Sparks Utility Questions

Community discussions have also raised questions about the makeup of some AMM pools. Specifically, one user asked Mekras about pairs made up entirely of issued tokens—for instance, RLUSD (a Ripple-issued stablecoin) combined with a memecoin or another fiat-based token. Mekras responded that the utility of such pools depends heavily on user participation and liquidity. He warned that too many inactive or low-volume pools could siphon liquidity from established, high-performing ones.

Although he acknowledged the potential utility of stable-to-stable asset pools, he pointed out that current low trust in stablecoins offered by platforms like GateHub and Bitstamp continues to be a major roadblock. Without widespread user confidence, these pools are unlikely to gain meaningful traction.

XRPL Lags Behind Competing Chains

Mekras drew comparisons to other blockchain networks, many of which have experienced rising total value locked (TVL) figures and renewed engagement. He emphasized that XRPL should, by all metrics, be among the top platforms for DeFi liquidity. However, the lack of high-caliber assets and the absence of leading stablecoin issuers have left it trailing behind its peers in capital accumulation and usability.

Technologist Hussein Badakhchani weighed in on the conversation by suggesting that beyond asset quality, AMM economics also need a rework to improve profitability for liquidity providers. Doing so, he argued, could add significant incentives for broader participation and more sticky liquidity.

Fee Structure Proposals Aim to Boost Engagement

In a proposal submitted by Badakhchani, he outlined a plan to raise the AMM fee cap from its existing 1% ceiling to up to 2.5%. This would allow liquidity providers to vote for higher returns based on market demand and risk appetite. Furthermore, the single-fee model currently in use could be replaced with a more detailed structure, including separate fees for operations like XRP and token deposits or withdrawals.

To enable this model, a new voting mechanism has also been proposed, one that accommodates a tiered fee structure while introducing safeguards—such as excluding blackhole (inactive) wallets from voting weight. The proposal also includes a backward-compatible migration process to ensure a smooth transition for existing liquidity pools.

Related: Expert Advice: Sell XRP If You’re Confused

As discussions unfold around capital efficiency, asset quality, and governance, the key takeaway is clear: for XRPL’s AMM to achieve sustainable growth, it must prioritize asset integrity, trust, and user incentives. Elevating both technical and financial frameworks appears crucial to turning passive pools into active, value-generating systems for the XRP ecosystem.