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Panos Mekras, co-founder of crypto-focused company Anodos, recently addressed concerns and speculation that XRP could pivot to a stablecoin when the XRPL welcomes the anticipated AMM.
In a recent discussion within the XRP community, the spotlight shifted to the anticipated governance approval of the XLS-30D Amendment, set to usher in a native Automated Market Maker (AMM) for the XRP Ledger (XRPL).
Speaking on the anticipated AMM, the founder of the Digital Perspectives media channel questioned if the development could potentially steer XRP towards being more of a stablecoin.
In his question, he asked if the introduction of the Automated Market Maker could put XRP in the category Group 1B Assets highlighted by the Bank of International Settlement (BIS). Notably, the BIS’ Group 1B assets refer to stablecoins which the BIS or other banks could leverage for payment facilitations.
An Attempt at Clarification
Responding to the inquiry, Panos Mekras first noted that the fundamental characteristics of XRP are immutable. According to Mekras, XRP will perpetually stand as the native coin of the XRPL, embodying decentralization and unrestricted trade.
1/ The characteristics of XRP can NEVER change. It will always remain the native coin of the XRP Ledger, a decentralized digital asset that anyone can trade freely. XRP can never become a stablecoin for that reason, it's technically not possible and makes no sense whatsoever.
— Panos 🔼{X} (@panosmek) November 14, 2023
In response to concerns about the XRPL AMM introducing stability to XRP, Mekras argued that AMMs thrive on volatility, creating opportunities for liquidity providers (LPs) to capitalize on increased trading activity.
Mekras debunked the notion that the XRPL AMM might transform XRP into a stablecoin, asserting the technical implausibility and the absence of logical grounds for such a shift. He emphasized that the AMM serves as another platform for trading XRP and XRPL tokens.
XRP Stability is Unnecessary with ODL
However, a member of the XRP community suggested that stability in value, rather than it being an actual stablecoin, could be beneficial.
Drawing a parallel with assets like PAXG, which tracks the gold price, the idea is to establish a value for XRP that remains relatively stable when transferring value. Mekras promptly rejected this notion, reiterating that Ripple’s ODL renders stability in seconds irrelevant.
The crypto author maintained that achieving a stable value for XRP is unnecessary, especially given the rapid transaction times inherent in Ripple’s ODL system. He dismissed the idea that XRP needs a stable value for effective value transfer, asserting that volatility within a few seconds is inconsequential.
Still not possible and doesn't need to. That's the whole of Ripple's ODL. Volatility in few seconds is irrelevant.
— Panos 🔼{X} (@panosmek) November 14, 2023
Another community figure referred to government documents describing XRP and XLM as stablecoins. Note that the World Bank called XRP and XLM stablecoins in a November 2021 report titled “CBDCs for Cross-Border Payments.
Mekras, undeterred, dismissed these assertions, emphasizing the lack of technical understanding within large organizations, institutions, and governments. He pointed out that many still incorrectly refer to XRP as Ripple, and XRPL as the Ripple network.