XRP Ledger Implements Clawback Amendment to Enhance DeFi Activity
A significant update went live on the XRP Ledger earlier today, as a clawback amendment received overwhelming support from validators, with over 90% voting in favor. This amendment introduces Ripple’s innovative dollar-pegged stablecoin, RLUSD, which is categorized as a clawback token. The incorporation of RLUSD into the XRP Ledger’s decentralized exchange (DEX) is expected to boost its liquidity and expand trading options, potentially driving increased activity within the decentralized finance (DeFi) ecosystem.
The term clawback refers to a unique feature embedded in certain tokens, allowing the issuer to reclaim or “claw back” these tokens from users’ wallets under specific circumstances. This mechanism is primarily designed to ensure regulatory compliance, enabling the recovery of assets in instances of fraud, illegal activities, or when tokens are mistakenly sent to incorrect addresses.
With the implementation of this update, the regulatory compliance of the XRP Ledger’s Automated Market Maker (AMM) pools is set to improve significantly. The amendment allows for the utilization of tokens equipped with clawback capabilities. Additionally, it has modified the AMMDeposit transaction type to prevent the deposit of frozen tokens into the AMM, further enhancing the security and efficiency of the trading environment.
The XRP Ledger boasts an integrated decentralized exchange (DEX), empowering users to swap tokens directly with one another. The Automated Market Maker (AMM) operates on a model that utilizes liquidity pools instead of the traditional order book system to facilitate trades. This AMM functionality was first introduced with the amendment known as XLS-30D in March 2024, and since then, it has successfully processed over $1 billion in swap volumes.
January has been particularly noteworthy for the DEX, with an impressive $400 million in trades processed, signaling a robust growth trajectory for the platform.
