XRPL AMM Pools - Liquidity Providing Guide

A trade puts one asset into the pool and takes the other out, so the price moves with every trade. Swaps on the ledger use the pool and the order book together, whichever gives the better price, so a pool earns its fee only on the trades it actually fills.

• Both assets, at the pool’s ratio. No fee: you add the two in the same proportion the pool already holds.
• One asset. Allowed, but it counts as a swap of part of it plus a deposit of both, so the pool’s trading fee is charged (rippled).

You need a trust line for any token in the pool, and the LP token arrives on a line of its own; each holds 0.2 XRP of reserve.

The fee is 0 to 1% of each trade the pool fills. Providers vote on it: the eight votes backed by the most LP tokens count, weighted by those tokens (rippled). xrpl.to shows a pool’s APY as its last 7 days of fees as a share of its size, times 52; it is last week’s pace, not a promise, and a small pool can show a huge figure from a few trades.

Each pool auctions a 24-hour slot: whoever holds it trades in that pool at a tenth of its fee, and can share that with up to four other accounts. The bid is paid in the pool’s LP tokens; part goes back to the previous holder for the time it had left, and the rest is burned, which raises every provider’s share of the pool (rippled). It is how arbitrage traders pay the providers for cheaper trades.

• Impermanent loss. When the two prices move apart, the pool sells the rising asset and buys the falling one, so you end up with less than if you had simply held both (how much).
• The token itself. In a pool of XRP and a token that collapses, sellers take the XRP out and leave the token behind: the providers end up holding it.
• Clawback. An issuer that enabled clawback can take its token back out of a pool too (AMMClawback).

How do I provide liquidity on the XRP Ledger?

Open the pool’s page on xrpl.to, connect a wallet holding the pool’s assets and deposit either both at the pool’s ratio or just one. You receive LP tokens for your share and can withdraw at any time.

How much can I earn in an XRP Ledger AMM pool?

Across all pools, providers earned 22,878 XRP in the last 7 days on 28.98M XRP deposited. A pool’s APY is its last 7 days of fees as a share of its size, times 52, and it changes every week.

What are LP tokens?

A token the pool issues to providers for their share. Returning them withdraws that share of both assets. They can be sent and held like any other token.

AMM data API · How trades route through XRP · How to swap tokens