Stellar Validators Vote In AMM Integration That Could Boost Liquidity

In addition to an order book-based token router, the protocol now boasts a parallel automated market maker.

AccessTimeIconNov 3, 2021 at 5:21 p.m. UTC
Updated Apr 10, 2024 at 3:10 a.m. UTC

In a protocol upgrade Wednesday morning, tokenized money transfer protocol Stellar has launched an automated market maker (AMM) that will operate alongside its order book-based router and matching engine.

The voted-in proposal could bring greater efficiency and utility by deploying a longtime staple of the decentralized finance (DeFi) world.

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  • Stellar is a blockchain protocol designed to facilitate cross-border payments between different forms of tokenized money, such as digital dollars and tokenized gold. Until today, the protocol operated with an orderbook-style matching engine, connecting buyers and sellers of various tokens.

    AMMs are a decentralized form of exchange pooling two assets, such as ETH and DAI, which automatically adjusts the price relationship between the assets based on trading volume. They are a particularly popular form of asset exchange in DeFi.

    In an interview with CoinDesk, Stellar’s head of ecosystem, Justin Rice, said that the addition of an AMM at the protocol level was a popular ask among developers and users, and that the implementation takes cues from Ethereum-native AMMs such as Uniswap v2.

    Users will now be able to deposit liquidity into pools for trading fees, and the implementation could prove to be a boon for market makers and arbitrageurs trading between prices on the order book and the AMM.

    Additionally, Rice said that this integration will make adding new assets to the protocol easier, as AMMs allow long-tail or exotic assets to trade despite limited liquidity.

    The AMM functionality went live at 11 a.m. Eastern time, or 15:00 UTC.


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    Andrew Thurman

    Andrew Thurman was a tech reporter at CoinDesk with a focus on DeFi.