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Ripple’s Chief Technology Officer David Schwartz, casts a spotlight on a crucial feature of the XRP Ledger (XRPL) known as auto-bridging. This comes at a time when excitement is building over Ripple’s new stablecoin, which is expected to bring more utility and liquidity to XRPL.
While not new to XRPL, auto-bridging is a unique feature on the DEX that uses XRP as the native currency to facilitate trades between any two assets on the ledger.
As the native currency on XRPL, XRP is inherently counterparty-free. Auto-bridging capitalizes on this by automatically using XRP as a bridge currency when determining the most efficient trading path between assets.
One of the primary applications for auto-bridging is the efficient trading of stablecoins on XRPL. Many DeFi applications rely on stablecoins, which are designed to limit volatility by being tied to a stable asset such as the U.S. dollar.
Auto-bridging works in tandem with the XRPL’s Automated Market Maker (AMM) function, which recently went live on the XRPL mainnet. When an AMM trade takes place on the XRPL, it can generate fresh trading offers that are compatible with the auto-bridging feature. This means that the auto-bridging feature can consider the newly created offers when processing trades.
In fantastic news for the cryptocurrency community, fintech behemoth Ripple will launch a USD-backed stablecoin pegged 1:1 to the U.S. dollar.
Ripple‘s stablecoin will be backed completely by U.S. dollar deposits, U.S. government bonds and cash equivalents, ensuring trust and stability.
Stablecoins serve as a pivotal entry point to DeFi, and introducing an enterprise-grade stablecoin to the XRP Ledger is expected to generate more use cases, liquidity and opportunities for developers and users alike.
