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Ripple CTO Breaks Down XRP Valuation Linked to Payments
In a recent interview, Ripple’s Chief Technology Officer, David Schwartz, clarified a critical misconception about Automated Market Makers (AMMs). According to Schwartz, the valuation of an asset, like XRP, is not solely dependent on the pool of assets within the AMM. Instead, the value of an asset is directly tied to the number of transactions it facilitates.
Schwartz emphasized that the valuation of a payment-focused asset, such as XRP, should be measured based on its ability to process transactions efficiently and at a lower cost than other methods. In other words, the value of XRP lies not in the size of the AMM pool but rather in its potential for widespread adoption as a medium of exchange.
AMMs are platforms that allow users to trade between two assets by providing liquidity for their trades. By pooling assets within an AMM, participants contribute to the platform’s overall stability and efficiency. This process creates a more efficient market with lower transaction costs.
It is crucial to note that Schwartz did not explicitly mention XRP or Ripple in his discussion of valuation methods.
Source: u.today
