Alright, this weekend, we want everyone to really understand how the XRP Ledger’s AMM (Automated Market Maker) and LPs (Liquidity Pools) actually work - because once you do, you’ll see why they’re so powerful, and why meme coins on XRPL can literally multiply your XRP bags.
Let’s break it down really simply.
What even is a Liquidity Pool?
A liquidity pool is basically a digital pot with two tokens inside - for example:
and
On one side of the pot, you’ve got DROP. On the other side, you’ve got XRP.
These two sides always need to be balanced at equal US dollar value. So if 1 side is worth $100, the other side must also be worth $100.
That’s the key. The pool automatically rebalances itself through the AMM - the “Automated Market Maker.”
How the AMM works
When people buy DROP, the pool gives them DROP and takes XRP from them. Now, the pool has less DROP and more XRP, so it slightly adjusts the price to keep the balance equal.
If people sell DROP, the opposite happens - the pool gives them XRP and takes DROP.
It’s a constant see-saw that keeps both sides balanced.
Why this matters if you believe in XRP
Here’s the fun part:
If XRP’s price goes up, the US dollar value of that side of the pool increases. To rebalance, the pool automatically buys more DROP to match it.
That means - if you’re holding DROP (or any meme coin paired with XRP) - your token’s price can automatically rise as XRP rises.
So, when people say:
“DROP tracks XRP”
That’s literally how it works. The pool algorithm keeps them tied together at equal value.
How you can earn from Liquidity Pools
Anyone can become a liquidity provider (LP). You just deposit equal USD amounts of both tokens into a pool (e.g. $10 worth of DROP + $10 worth of XRP).
Every time someone trades that pair (buy/sell), a small fee is charged - usually between 0.1% and 1%.
Those fees go straight to you, the liquidity providers, based on your share of the pool. So, you’re earning passive income just by helping provide liquidity.
It’s like being the house in the casino. Every trade, you take a small cut.
What makes XRPL’s AMM different
The XRP Ledger’s AMM is built directly into the blockchain itself - it’s not some external DeFi app or smart contract like on Ethereum or Solana.
That means:
- •✅ Super fast transactions (3–5 seconds)
- •✅ Near zero gas fees
- •✅ Transparent + decentralized
- •✅ Trades and pool adjustments happen on‑ledger
And when you add liquidity or trade, you’re interacting directly with the XRPL.
How to get involved
- Go to platforms like XPMarket, First Ledger, or Magnetic.
- Find a pool - e.g. DROP/XRP, DROP/FLAME, FUZZY/XRP.
- You can:
- •💰 Trade between tokens
- •💧 Deposit liquidity and earn fees
- •📊 Track prices and yields
The more volume the pool has, the more fees LPs earn. The deeper the liquidity, the more stable the price.
Why it’s all bullish
Because every meme coin on the XRP Ledger that’s paired with XRP is linked to XRP’s price action.
So when XRP pumps, all those pools need to rebalance upward - which means buying pressure on the meme coin side.
That’s why projects like DROP, SPLASH, FLAME, FUZZY, PHNIX, and others all move in sync with the ledger. They’re part of the same ecosystem of liquidity.
You’re not just betting on a coin - you’re part of a system that tracks XRP’s success and rewards liquidity providers along the way.
In short
- •Pools always balance both sides equally.
- •AMM auto-adjusts prices to stay balanced.
- •XRP rising = meme coins get bought automatically.
- •LPs earn trading fees passively.
- •XRPL’s system is fast, built‑in, and gasless.
- •Everyone can participate.
The more you understand it, the more powerful it gets.
💧 Learn it. Use it. Build with it. This is how we grow the XRPL together.