Ripple’s Chief Technology Officer, David Schwartz, recently tackled a pressing inquiry regarding the XRP token and its prospects for gradual appreciation.
Schwartz’s insights surfaced amidst a flurry of community discussions surrounding the token’s role in generating passive income, especially following the activation of the XRP Ledger automated market maker (AMM).
Here is a chart of bitcoin over the past 12 years on a log scale. The long-term behavior is that of gradual appreciation.
When evaluating things like AMMs or staking, I generally evaluate them as an alternative to long-term holding which gives you this long-term gradual… pic.twitter.com/KK718g0c1k
— David “JoelKatz” Schwartz (@JoelKatz) March 10, 2024
Schwartz said that XRP was like many other cryptocurrencies in that it was volatile. He discussed “incremental value growth,” comparing it to Bitcoin’s long-term path over the past twelve years.
Schwartz pointed out that AMMs could profit from digital assets’ natural volatility while reducing the risks of long-term price changes.
Schwartz’s comments directly addressed concerns about how XRP doesn’t appreciate as slowly as other risky investments.
AMMs and Staking: Sustainable Options
He argued that AMMs and staking are viable alternatives to standard long-term holding because they offer ways to make money while considering the volatility of digital assets. Schwartz stressed the role of AMMs in offering sustainable yields without making unrealistic promises. This goes against the idea that taking on more risk can get higher returns.
Since XRPL’s AMM went live, conversations have been held about using XRP to make idle income. Because of this, some people who bought DeFi products got the wrong idea about their risks.
Schwartz’s explanation was meant to educate stakeholders and reduce unrealistic expectations, pushing for a smarter and more realistic way of using XRPL’s decentralized features.
