XRPL Needs High-Quality Assets Like Stablecoins and RWAs to Fix Stagnant AMM Liquidity Despite Rising Pool Count

Panos Mekras says the XRPL needs high-quality assets like stablecoins and RWAs to fix stagnant AMM liquidity despite rising pool count.

Panos Mekras, co-founder of Anodos Finance, has highlighted the issue of stagnant AMM liquidity despite a rapidly increasing number of liquidity pools on the XRPL.

As of May 7, 2025, XRPL’s automated market maker (AMM) ecosystem has seen a rapid increment in the number of liquidity pools, reaching 19,782. However, XRP liquidity across these pools has remained stagnant since early 2025, hovering around 13.39 million XRP.

The disparity between pool creation and actual capital inflow has been a topic of discussion within the XRPL community. Mekras brought up the issue on X, mentioning that while token and pool numbers have surged, meaningful growth in XRP-backed liquidity has failed to materialize.

There is an obvious issue: XRPL's AMM has been very stagnant and not much new XRP has been added for months, while the number of pools and worthless tokens keep growing. The only solution is more high quality assets - stablecoins and RWAs (as soon as possible) - combined with ...

— Panos 🔼{X}GR (@panosmek) May 7, 2025

The expanding pool count is being driven primarily by tokens with limited utility. Many new tokens are being issued with no use case or value, yet they continue to extract liquidity from the ecosystem, Mekras noted.

Instead, he argued for introducing higher quality assets—such as stablecoins from top issuers and real-world assets (RWAs).

Moreover, platforms that can enhance onboarding and user interaction with XRPL are crucial. Both builders and users must demand better standards from new projects to prevent further fragmentation of liquidity.

One user on X asked Mekras about pools involving two issued tokens—such as RLUSD paired with a memecoin or another fiat-pegged asset. The question focused on the accessibility of such pools and whether they offer meaningful utility.

Mekras responded that their value depends on demand and liquidity. He added that low-activity pools can divert resources away from top-performing pools.

As long as there is enough demand and liquidity, this is good. Otherwise you are just splitting liquidity that could go to the top pools. Stable to stable pools are great, but we need more top stablecoins from top issuers as it seems like most people do not prefer or trust ...— Panos 🔼{X}GR (@panosmek) May 7, 2025

While acknowledging that stable-to-stable pools could be beneficial, he pointed out that user trust in existing stablecoins from GateHub and Bitstamp remains low.

While activity on other chains continues to see growth in total value locked (TVL), XRPL’s liquidity has remained relatively unchanged. Mekras noted that competing chains have already attracted billions in TVL and are now seeing renewed momentum.

In contrast, XRPL’s low liquidity persists. He stated that the ecosystem should already rank among the top chains by liquidity, yet lacks the presence of top-tier stablecoin issuers.

A technologist, Hussein Badakhchani, who first called attention to this growing concern, responded that while high-quality assets are important, improving the fee structure to better incentivize liquidity providers could also be effective.

His suggestions include a proposal to raise the AMM fee cap from 1% to 2.5%, allowing liquidity providers to vote for higher returns. Another change involves replacing the existing single-fee model with a more granular, operation-specific structure covering XRP and token deposits and withdrawals separately.

To support this, a revamped liquidity provider (LP) voting mechanism was proposed, designed to accommodate the multi-tiered fee model. The suggestions also call for excluding blackhole wallets from LP vote calculations to prevent inactive addresses from impacting fee adjustments.

Finally, to ensure continuity, Badakhchani recommended a backward-compatible migration strategy for existing pools.