The XRP Ledger ecosystem is experiencing a historic shift, one that is sure to open up exciting yield generating possibilities for its users. Fueling this evolution are three key developments: the introduction of a native Automated Market Maker (AMM), the expansion of stablecoin liquidity spearheaded by RLUSD, and the integration of an Ethereum Virtual Machine (EVM)-compatible sidechain launched in June 2025. Taken together, these features expand XRP’s usefulness in the burgeoning Decentralized Finance (DeFi) ecosystem.
The XRP Ledger’s native AMM lets existing liquidity providers earn a share of every trade fee directly on the ledger. This feature exponentially increases the development of stablecoin liquidity via RLUSD and the onboarding of the EVM sidechain. Consequently, it lays the foundation for greater yields across the XRP ecosystem.
The AMM’s design encourages single-sided deposits, making it easy for users to participate. Ripple’s dollar-backed stablecoin RLUSD complements this ecosystem by increasing the dollar liquidity and stability of XRP trading. The EVM sidechain integration allows developers to deploy Ethereum style applications, all while bringing XRP into the fold of their processes.
In order to make sense of how users are able to earn yield, let’s look at how liquidity pools work. Users deposit two assets, typically XRP and a corresponding token (such as a stablecoin) into a pool. Through the seamless integration of chains traders can now securely and efficiently exchange between these assets. In return, liquidity providers collect a portion of the trading fees that are generated.
While adjusting your strategy around impermanent loss is essential, the key is recognizing this risk. This happens when the price of one asset in the pool moves enough in one direction or another, compared to the other asset. In fact, there are times when wrapping assets together can actually reduce their value. Each asset individually held may be a more prudent and effective approach.
The adoption of an EVM sidechain, which is genuine interoperability with other chains, in June 2025 will be a golden moment for the XRP Ledger. This makes it possible for developers to deploy Ethereum-compatible applications, increasing the functionality and versatility of the XRP ecosystem. This integration creates new opportunities and goes beyond provincial borders. Of course lending platforms, vaults and other DeFi products can now easily integrate with the on-ledger AMM. This power pair enables the development of complex, multi-layered yield strategies, offering users deeper, more sophisticated ways to earn yield.
Ripple's strategic partnership with Bank Digital Asset Custody Company (BDAC) is proving beneficial, as XRP support goes live at the Korean crypto custodian. This collaboration, Ripple says, furthers the ability for institutional investors to access and secure XRP holdings.
We expect custodians and prime brokers in the crypto space to quickly implement support for XRP Ledger’s AMM functions. This would do a lot to further legitimize and mainstream XRP’s DeFi capabilities.
As I write this, XRP is trading in the low $3 range, close to its multi-year high. The rise in price is a testament to the increasing belief in XRP’s transformational promise and in the increasing power of its ecosystem.
With that legal uncertainty surrounding XRP now mostly settled, a deeper pool of potential players will likely enter the market. As regulatory clarity on XRP is achieved, traders, market-makers, and institutions are better positioned to engage with XRP.
The liquidity creation of RLUSD for stablecoins is key. It greatly increases the liquidity and efficiency for which the XRP trades. Having a strong stablecoin presence means you have a stronger, trustworthy bridge between XRP and the rest of the crypto ecosystem.
The EVM sidechain further opens up the possibilities of what applications can be built on the XRP Ledger. It is attracting developers who are deeply fluent in the Ethereum ecosystem. This influx of talent and innovation is crucial for leading the growth and adoption of XRP’s DeFi capabilities.
The native AMM gives users a decentralized, permissionless method of providing liquidity and earning fees. The single-sided deposit feature greatly simplifies participation in the program for all parties. It makes it easier to participate and creates space for a much larger audience to help build the ecosystem.
Together with a vibrant developer ecosystem, this combination provides a powerful foundation for XRP to continue driving DeFi progress. With adoption skyrocketing, liquidity pools are getting deeper and new DeFi applications are coming onboard. For this reason, XRP now has the potential to be a very competitive yield generating crypto ecosystem.
Among other things, the integration of the EVM sidechain notably improves interoperability between the XRP Ledger and the broader Ethereum ecosystem. That makes it easy to transfer assets and data back and forth seamlessly between the chains. As a consequence, it creates tremendous demand for XRP’s utility.
The possibility of impermanent loss is one of the most important factors to consider for all those providing liquidity in liquidity pools. As always, users should do their own risk-reward analysis before depositing their assets.
Ripple consistently nurtures a flourishing and creative XRP ecosystem. Its strategic partnerships and continued development activity are strong indicators of this commitment. The company’s efforts to increase XRP’s utility and accessibility continue progressing its adoption and growth.
As custodians and prime brokers integrate support for XRP Ledger's AMM functions, institutional investors will gain greater access to XRP's DeFi opportunities. This new wave of institutional capital has the potential to supercharge the growth of the ecosystem.
The resolution of legal uncertainties surrounding XRP has removed a significant barrier to entry for many potential users and investors. With increased regulatory certainty, XRP will be able to reach a broader audience and realize its full potential.
XRP Ledger’s emphasis on speed, efficiency, and low transaction cost makes it an ideal home for DeFi projects. These benefits, together with the updated yield prospects, make XRP a sizzling alternative to competing blockchain platforms.
