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XLS-30: AMM Specification #125

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Oct 4, 2023
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Update XLS-30/README.md
Co-authored-by: Elliot Lee <github.public@intelliot.com>
aanchal4 and intelliot authored Aug 29, 2023
commit 42d4a0b9b6623537bfdc98e0462105a525d8fbe9
2 changes: 1 addition & 1 deletion XLS-30/README.md
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@@ -17,7 +17,7 @@ The AMM instance charges a spread on the trades that change the ratio of tokens

The AMM instances also provide governance rights to the largest share holders of the AMM instance. This allows them to vote on the trading fee the instance charges.

XRPL's AMM based DeX interacts with XRPL's limit order book (LOB) based DeX so that users of AMM pools have access to all order flow and liquidity on LOB DeX, and vice versa. The payment and order placement transactors automatically determine whether swapping within a liquidity pool or through the order book will provide the best price for the user and execute accordingly. Pathfinding considers paths with both order books and AMMs in various combinations to improve the overall exchange rate.
XRPL's AMM based DEX interacts with XRPL's limit order book (LOB)-based DEX so that users of AMM pools have access to all order flow and liquidity on LOB DEX, and vice versa. The payment and order placement transactors automatically determine whether swapping within a liquidity pool or through the order book will provide the best price for the user and execute accordingly. Pathfinding considers paths with both order books and AMMs in various combinations to improve the overall exchange rate.

### 1. Introduction
AMMs are agents that pool liquidity and make it available to traders according to a predetermined algorithm. This is a proposal for geometric mean market maker (GM3)-based DEX as a native XRPL feature. GM3 algorithmically discovers a fair exchange value, stabilized by arbitrage, to automatically produce liquidity. On XRPL, this would provide liquidity pools between XRP and issued assets as well as between any two issued assets. Arbitrageurs play a significant role in keeping the AMM DEX in a stable state with respect to external markets.