dYdX Chain Unveils Incoming LP Vaults and AMM Engine

Top Decentralized Finance (DeFi) protocol dYdX has hinted at plans to release Liquidity Provider (LP) vaults and an Automated Market Marker (AMM) engine. 

dYdX Launches LP Vaults in 2 Phases

The protocol is considering introducing LP vaults to help enhance liquidity for all markets on protocols that utilize the dYdX Chain software. 

Beyond its general usefulness, these LP vaults will be crucial for newer markets that are most likely to have limited liquidity. Based on dYdX’s plan, the deployment of the LP vaults would be on the dYdX Chain open-source software.

Noteworthy, the LP vaults will be deployed in two phases. The first phases will only support deposits seeing that it would include an experimental version of LP vaults that is deployed at a protocol level. This would have no accompanying front end. As an experimental phase, dYdX Trading advises that any deposits into the given LP vaults be limited in volume and should be to protocol community funds.

Moving forward, the next phase will then bring the withdrawal feature to depositors. Precisely, depositors from Phase 1 will now be allowed to withdraw from each LP vault and enjoy front-end functionality. dYdX Founder Antonio Juliano also took to X to announce the upcoming launch of an AMM on the protocol—both the LP vaults and the AMM engine work in synchrony to bolster liquidity.

The LP vaults automate providing liquidity to AMM-based DEXs while the AMM will provide the necessary incentives for LPs. These dYdX new offerings and other products from the protocol are not available to residents of the United States.

dYdX Chain to Join XRP Ledger In AMM Launch

The latest move from dYdX to launch an AMM comes after top crypto protocol XRP Ledger (XRPL) unveiled its own AMM version earlier this month. 

Already, the AMM engine has welcomed a handful of pools including one with an LPToken balance with enormous funds. In addition, the newly launched AMM boasts of the XRP/USD, XDX/XIO, and XRP/BTC amongst other functional liquidity pools.

Since the XRP Ledger AMM went live, it has now welcomed its first amendment dubbed the fixAMMOverflowOffer after it passed through a voting process with validators. The fixAMMOverflowOffer upgrade was designed to fix the improper handling of large synthetic AMM offers in the payment engine.

The dYdX AMM update is poised to push bolster the price of its native token in the long term. At the time of writing, the token is up 1.04% in the past 24 hours and is pegged at $3.49.