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“XLS30D: Unleashing the Power of AMM Liquidity Pools on the XRP Ledger”

September 25, 2023

Dear fellow XRP Community members,

Are you excited to embark on a revolutionary journey that’s set to propel the XRP community on a revolutionary leap forward? Brace yourselves, because we are heading into the deep end the introduction of Automated Market Maker (AMM) pools on the XRP Ledger is nothing short of a game-changer. Ripple’s CTO and XRP Ledger Co-Creator had this vision for over a decade, and now, it’s finally here! In this blog post, we’ll explore the significance of AMM pools and how they will transform the XRP ecosystem. So, XRP enthusiasts, let’s embark on this exciting journey together!

In an insightful paper “Steps towards an ecology of money infrastructures: materiality and cultures of Ripple” by Ludovico Rella

The Genesis of AMM Pools:

Imagine a scenario where the perennial challenge of liquidity, often likened to the “chicken and egg” paradox, is ingeniously and brilliantly solved. XRPL AMM pools are set to deepen liquidity across numerous tokenized Fiat Stablecoins, and blue chip crypto pairings to XRP.

What sets XRPL’s XLS30D AMM Liquidity Pools apart is their innovative approach to maximize the revenue potential earned by Liquidity Providers, which is accomplished in two ways:

David Schwartz has said Harvesting of Volatility for Yield.” In this twitter thread below 👇 he sheds some light on that how that’s related to the “Continuous Auction Mechanism.” David is actually responding to my tweet in twitter thread explaining the continuous auction mechanism to someone and he flat out says there are “TWO things going on.” 🤯

Besides earning from FEES generated by AMM from traders swapping, XLS30D AMM offers Liquidity Providers TWO uniquely novel ways to earn additional revenue, is “Harvesting of Volatility for Yield”

“Continuous Auction Mechanism” — which winning bid from Arbitrageurs pay with LP tokens and they are destroyed but the underlying 2 assets they are a claim on are redistributed to all the other Liquidity Providers LP tokens. The quantity of XRP and the other asset in the pool remains unchanged, the 2 assets underlying the burned LP tokens were redistributed proportionally to all LP tokens.
“Harvesting Volatility for Yield” — The AMM enacts a trading strategy that earns a spread from orders it offers on the DEX orderbook. This is where XRP’s ultra low txn fees and blazing fast 3–5sec settlement really shine ✨ Over a long duration the AMM continues to capture small amounts in a spread over and over and this VALUE CAPTURED is actually added to the AMM Pools total value. The AMM Pools policy is designed so that it will never accept offers that decrease the total value of the pool, only that keeps it the same or increases the value. As volume increases and/or volatility increases these profits the AMM earns from its “Trading Strategy” are amplified. This is only possible because of the Trio of technologies that all working in unison and the XLS30D AMM’s have been designed to always enforce the policy in its code.

Software automatically reads from AMM’s bonding curve and employs the Fibonnaci sequence to provide orders on CLOB using LP capital from AMM Pool. We should expect to hear more about this in near future from David Schwartz and RippleX Devs. It was only very recently that I was able confirm that this is a separate action from the continuous auction mechanism. This actually adds value to the pool by earning that spread. This is the beauty of having this trio of technologies operating together like a symphony at the PROTOCOL LAYER.

It’s important to note that the “Continous Auction Mechanism” and “Harvesting Volatility for Yield” will BOTH be amplified in times of high volatility, which is defined as large horizontal movements within a price range or channel.

Liquidity providers’ earnings persist within the pool, continually compounding in real-time.

When XRP or any crypto is paired with fiat and experiences increased volatility, it almost invariably accompanies a surge in global market trading volume for that asset. Consequently, this results in higher fees earned by the Automated Market Maker (AMM). These fees come from trades and payments between the two assets in the pool. Continuous Auction Mechanism auctions off 24hrs of No trading fees in its AMM Pool. Winning arbitrageur of auction has the LP tokens they bid to win, redistributed proportionally to all liquidity providers.

The AMM capitalizes on this volatility by harvesting yield through executing synthetic offers as part of its “Trading Strategy” on the DEX order book. Impermanent loss is a concern for many crypto owners, but the XLS30D specification offers three ways to earn yield for liquidity providers, specifically designed to maximize yields during periods of high volatility.

It’s a well-known fact that cryptocurrencies don’t follow a linear upward trajectory. This also means that depositing liquidity in XRP alone as a single asset within a USD/XRP Pool can reduce exposure to downside volatility by nearly 50%. The AMM takes care of this by automatically swapping half of the value of the XRP deposited into the other asset in the pool. For instance, in an XRP/USD pool, half of the deposited XRP will be automatically swapped to USD, and you’ll only incur the fee percentage rate of that particular AMM Pool on the 50% of value you initially deposited in XRP.

“This reduction in exposure to downside volatility, combined with a continuous and steady yield flow, will significantly enhance XRP’s allure for institutional investors and long-term XRP holders.”

LP Tokens — Yield-Bearing Premium Collateral

In the world of XRP Community, discussions about Automated Market Makers (AMMs) often miss a crucial point. When you become a liquidity provider, you’re essentially staking the pool, and in return, you receive LP tokens. These tokens represent your ownership share of the assets in the pool. Each pool has its unique LP tokens, and various apps will show you the percentage of the pool that your LP tokens signify. It’s vital to note that these LP tokens are independent of the issuer of the other asset in the pool.

XRP is a WEALTH MACHINE

XRP Ledgers huge benefits for XRP Institutional DeFi #AMM🚀

XRPL Private CBDC XRPL networks allow for the ability to bring together market participants to support testing of institutional DeFi Applications using CBDC’s And stablecoins.

They are full throttle ahead building a Top Down Institutional DeFi ecosystem with multiple acquisitions and partners building in coordination, all the necessary modular components necessary to support the inevitable TSUNAMI 🌊 OF INSTITUTIONAL VALUE that will pour in from fiat to this new on-ledger token based financial ecosystem.

Equipped with multiple secret weapons and aligned incentives of market participants to expand the Primary Liquidity Market in a sustainable manner that evolves into the ultimate value exchange and liquidity system that is simply going to be unmatched.

The AMM’s powerful architecture is designed to maximize Liquidity providers yields in revolutionary ways. XRP will be an investable asset that doesn’t sacrifice its utility but instead amplifies it to drive a consistent DEMAND for XRP in Liquidity Pools. Increasing transactional demand and spinning the liquidity flywheel to record speeds. PRISMA will provide the continuous volume that demands a level of liquidity and if it drops then yields shoot up attracting new investors and with so much interest in finding ALPHA from Wall Street, XRPL AMM Pools is built on a foundation of providing a service that utilizes XRP’s Utility as LIQUIDITY. Forget overnight flip switch, price sets, gold backed, and buy backs, all are waste of time and honestly any seasoned investor would rather be on the first train of the WEALTH MACHINE and hold the asset you believe in and add on a continuous stream of yield that will amplify in times of volatility.

The Unique XRP Ledger Guarantee

Consider the example of the XRP/USD Pool on the XRP Ledger. Here, liquidity providers receive LP Tokens that represent their proportional ownership of the pool’s assets based on their deposits. What makes this different from other AMMs is that, instead of being issued by a Dapp smart contract, the XRP Ledger itself guarantees that you can redeem these LP tokens at any time for the current value of a 50:50 XRP/USD pair. You can withdraw to XRP directly without even setting up a trustline to the issuer of the other asset paired with XRP in the pool. However, it’s essential to understand that you are indirectly exposed to 50% of the issued USD in the pool while you hold the LP token.

Stablecoin Issuers and the Future of XRP/USD Pools

As the Amendment passes an 80% Governance vote by XRPL validators and the Node community for two weeks, we can anticipate the creation of multiple XRP/USD pools on the mainnet XRP Ledger. Stablecoin issuers also have the option to add a transfer fee to the stablecoins they issue, allowing them to earn additional revenue with each transfer. Furthermore, with increasing regulatory clarity, especially in the United States, we can expect easier on/off ramps for fiat stablecoins directly from bank accounts and other digital wallets that connect to traditional fiat payment systems.

The XRP Ledger was intentionally designed to support Financial Institutions (FI’s), Banks, Exchanges, Custodians, and even Central Banks in issuing tokenized assets onto the XRP Ledger. These assets can represent off-chain assets such as fiat currencies, physical commodities, real estate, securities, and more. The trustlines combined with the clawback amendment provide essential security guarantees, ensuring that only XRPL accounts with authorized trustlines can access the pool for both single and two-asset withdrawals.

XRP Ledger’s protocols trio of technologies:

AMM,Central Limit Order Book (CLOB) DEX, and the Payment Execution Engine. These elements form a seamless and network of liquidity on the XRP Ledger, giving XRP its Primary Liquidity Market. The “OG DEX” as David Schwartz has referred to it. Broader crypto community has overlooked the XRPL DEX for many years but they are in for a surprise they never saw coming when this trio of programmable technologies are fully integrated with each other after AMM proposal XLS30D is officially passed governance vote by validator and Node community

XRP Unique Offering:

Unlike other cryptocurrencies that rely on “secondary market liquidity,” XRP boasts a Primary Liquidity Market powered by its native protocols, offering programmability like no other. The native DEX central limit order-book by itself was not able to provide the deep pools of liquidity to match secondary market liquidity on CEX’s. With the upcoming addition of the groundbreaking XLS30D unique AMM implementation has novel features that generate multiple streams of continuous compounding yield. This will undoubtedly attract liquidity providers to deposit XRP and a variety of other assets into the pool, as well as fiat Stablecoin issuers and arbitragers. This creates a powerful sustainable foundation of unified liquidity that aligns all the interests of the market participants.

Then the real fireworks will begin when Ripple’s intelligent Liquidity Aggregator, PRISMA is able to intelligently route ODL volume through the XRPL DEX and AMM pools. Considering ODL is designed to use XRP as a bridge asset to instantly settle international fiat cross border FX payments, there needs to be deep pools of organic sustainable liquidity that’s not dependent fragmented liquidity from speculative trading on 600 global crypto exchanges. That global fragmentation of liquidity has meant Ripple has had to subsidize liquidity in certain corridors by paying incentives to professional market makers. PRISMA’s Implementation in 2020/2021 to power ODL and Liquidity Hub, has had a significant impact on expanding ODL into 45+ corridors, reducing reliance on Ripple to payout incentives to market makers. But it’s still dependent on speculative crypto trading volume and is never going to be able to scale to the levels liquidity necessary for XRP to reach its full potential. Many people in XRP Community tend to over focus on only XRP the digital asset and completely overlook the fact that its native network the XRP Ledger was purpose built to be a global distributed exchange powered by its protocols, a sophisticated payment execution engine that allows for multi pathfinding and and cross currency autobridging and the worlds first ever DEX aka Decentralized Exchange with a an automated matching trading engine that works in unison with the payment execution engine. The Ledger itself was designed to facilitate payments and trades between multiple fiat currencies, cryptocurrencies and other assets like gold or securities that were issued onto the XRP Ledger.

The integration of AMM Liquidity Pools is the single biggest enhancement to the XRP Ledger, its brilliant design provides XRP the digital asset with the native economic model it has sorely been lacking the past decade. With its underlying programmable protocols that give it intrinsic value as a global value exchange, primary market liquidity for XRP, and a multi asset payment execution engine.

I will be covering primary market liquidity, XRPL AMM LP Tokens, and deeper dive into a real valuation framework for XRP based off its demand to be staked in the AMM pools as its predominant driver for demand of XRP. Keep a lookout for this in an upcoming YouTube video and blog post in this series.

The Power of the Payment Execution Engine:

XRP’s payment execution engine is a marvel, with programmable payment capabilities that can navigate complex trading paths. It always seeks the best path, utilizing both order-book “offers” and AMM pools, a feature unmatched by other networks.

Ripple recently released a white paper 📄 on XRPL Payment Execution Subsystem

Who Can Participate in AMM Pools:

• The XLS30D AMM Spec is designed to attract a diverse range of participants, from financial institutions to hedge funds, corporates, crypto VC’s, DAOs, and even retail investors. Anyone on the planet can deposit XRP into AMM pools, and the possibilities are endless.

Growing the Pie:

AMM pools may contain a pair of any two assets issued natively on the XRPL or bridged over from another network. Although the AMM is fully decentralized in that no single entity has any additional administrative powers than any other entity, if an AMM pool contains a centralized issued asset like a Fiat stablecoin, then that issuer requires trustlines and likely KYC/AML verification for someone to swap into or hold that asset in their account. Providing liquidity in the other asset, say it be XRP, is not required to have any direct exposure to issuer. Yet it’s still a centralized issuer issuing one of the two assets. Also note that even the creator of the AMM pool has no authority over AMM pool, they cannot blocked anyone from providing liquidity to the pool in the other asset but anyone trading into or out of the asset they issued will need to have an authorization from them which is what makes the trustlines such a powerful assistant to regulatory compliance for issuers. Proposed clawback amendment will extend their ability to have more fine grained control over the asset they issued but it still has NO control or authority over single deposit liability providers of the other asset in the pool, nor their LP tokens. LP tokens trustlines go to the special root account at are set at zero. Meaning there’s no credit or debit relationship. Only that LP token is guaranteed to redeem its ownership share of assets in the pool. A single asset withdraw is possible.

There will be pools that have 2 decentralized assets that. neither asset has a centralized issuer. For example, this would include native XRP, a XRP-collateralized stablecoins and assets bridged from the Flare Network through a trustless gateway. With XLS38D Side Chain amendment set to be proposed on the heels of XLS30D AMM, which will open up the floodgate for for EVM based chains native assets and ERC20's, ERC721 NFT’s via the purpose built EVM side chain. Which is a collaborative between RippleX snd Peersyst. It is currently live on DevNet with a two-way EVM-XRPL bridge. David Schwartz has been adamant about the need to bridge over blue-chip crypto assets like BTC, ETH, LTC, SOL, ADA, and DOT in a DECENTRALIZED manner that they can then seamlessly be integrated into AMM pool paired to XRP. Broadening liquidity for payment execution engine to draw down multiple XRP paired pools and orders on CLOB to achieve the best price.

This is the beauty of having a unified liquidity system, it’s as true to being a “primary market” as possible. This is something that cannot be replicated in its entirety, it provides a unique advantage in competing to be the dominant asset for global liquidity in the future tokenized world. The message has always been consistent from Ripple and David Schwartz, it’s the positioning of XRP and enhancing its native distributed exchange and payment execution engine. Placing XRP in an advantageous position to capture additional liquidity in the “Long Tail,” if an asset is liquid to XRP then it’s liquid to any other asset liquid to XRP. No public crypto asset will be chosen by central banks or agreed upon by global banks to be the next global reserve currency. Instead, in a world where the INTERNET of Value allows for the seamless transfer of value between any two assets or currencies in the same way information is transferred today. The rise of a dominant asset for global liquidity will happen organically by natural market forces of a capitalist society.

The Economic Model:

With the addition of AMM pools, liquidity on the XRP Ledger will be unified. These pools are designed to generate fees, profit from arbitrage opportunities, and harvest volatility for yield. This unique model helps mitigate impermanent loss and reduces the impact of downside volatility on XRP.

Unveiling the Power of Continuous Yield:

In the dynamic realm of XRP, we stand on the cusp of a profound shift in perspective. Instead of fixating solely on short-term capital appreciation, it’s time for the XRP Community to embrace a new era of understanding — one that delves into the intricacies of how XLS30D AMM Pools orchestrate the generation of yield through the strategic deployment of XRP as liquidity. This is no ordinary feat; it’s a novel design that transcends the realm of conventional Uniswap DEX forks. It’s a protocol ingeniously woven into the very fabric of the network layer, seamlessly intertwining a value exchange DEX order book with a sophisticated payment execution engine.

What sets this apart?

It’s the achievement of UNIFIED LIQUIDITY across the entire network, a rare gem in the crypto universe.

This gem is destined to shine even brighter, thanks to the organic and consistent demand for liquidity generated by RippleNet’s ODL and Liquidity Hub Volume, artfully channeling transactions through the AMM Pools, orchestrated by PRISMA. Unlike the often gimmicky liquidity mining rewards and artificial yield incentives meant to compensate for impermanent loss, high gas fees, and the extractable value on platforms like Uniswap V2 and others, XRPL AMM Liquidity Pools emerge as nothing less than a WEALTH MACHINE.

The magic lies in the multitude of ways to earn yield beyond just FEES. There’s no upper limit; the ecosystem can flourish when high volumes yield high rates compounded daily. And then there’s the LP token, a super-premium collateral that assures liquidity providers that their assets in the pool are forever redeemable, regardless of market fluctuations. Their composition may have changed since depositing, but the LP token offers an unwavering guarantee.

Now, you might wonder about calculating potential APY percentages. As AMM’s come to life post-validator vote amendments, we can anticipate comprehensive documentation and an array of community projects sprouting forth. These will equip liquidity providers with tools and resources to estimate earnings based on various metrics and market conditions.

Depositing liquidity in AMM’s on XRPL is a leap into a world without counterparties, without permissions. It’s an entryway into the realm of native compounding yield, paid through Fees accrued from asset swaps within the pool. Every XRP owner can join this venture, utilizing non-custodial wallets to infuse XRP liquidity into any AMM pool featuring XRP as one of the two assets. Brace yourselves for the burgeoning DeFi ecosystem around AMM Pools, offering XRP holders conservative options and opportunities, starting with DeFi Protocols like lending and borrowing seamlessly integrated with XRPL AMM’s.

In the world of XRP, its Decentralized Exchange (DEX) is the beating heart at the center of the XRP Ledger (XRPL) — pumping fast,ow-cost and expansive LIQUIDITY throughput the network.

Typically “Volatility” (large horizontal price movements within a channel” are considered a negative for XRP’s quick settlement speed makes liquidity the key factor. AMM pools transform asset volatility into a revenue stream, increasing the pool’s value by leveraging LP’s assets.

Liquidity provisioning is not merely participation; it’s a service that enhances network liquidity, facilitating programmable offers, cross-currency pathfinding, and instant settlement. AMM Pools and DEX aren’t mere add-ons; they’re intrinsic components of the network, unlike Ethereum’s complex smart contract DApps. The rewards? A continuous stream of yield, compounding daily, amplified during bouts of high volatility and heightened volume, tempered when the markets calm.

Now, imagine this: depositing XRP into an XRP/USD pool significantly reduces downside volatility risk. You accumulate more XRP, and half of your value in the pool is spread evenly between the two assets. This is a game-changer, especially for institutions. They’ll experience far less exposure to XRP’s inherent volatility while reaping the rewards of daily compounding yield, accentuated during tumultuous market phases. They also receive an LP token, XRPL LP tokens are issued at the protocol layer by the Ledger itself, unlike the spaghetti web of different Liquid Staked ETH tokens that are issued at Application Layer and by Dapps, DAO’s and even Centralized Exchanges. For anyone unaware, this is the single biggest growth area in all crypto and has recently exceeded previous highs set during 2021 bull run. The power of composable yield bearing asset has potential to be used in a wide range of DeFi Dapps and protocols in a growing Borrowing /Lending, Derivatives, Options, Yield Farming, stablecoin creation and many more.

The DeFi ecosystem is the most advanced on Ethereum mainnet. ETH staking combined with the “Merge” are part of ETH economic model as more than a gas token but an “internet bond” is what it is being pitch as to institutional investors. After the merge roughly $300-$500 million is burned in ETH every month, which is extracted from the users of the network, paying exorbitant fees, with a small percentage, going to award the validator’s and delegators which is 4 to 5% APY. We need to keep a close eye on the impacts of this economic model cause this is significant deflationary pressure that Innoway is artificially being generated at the expense of uses of the network which won’t be sustainable.

Where is on the XRP LEDGER a AMM, Liquidity and Pools are designed with novel features that align incentives of all the participants of the ecosystem to drive sustainable demand for a XRP as Liquidity in the AMM Pools as more Pools are spun up and volume in thanks to RippleNet’s ODL and Liquidity Huh which are under a major effort to be integrated to the XRPL DEX CLOB, AMM, and payment execution engine, which all operate in perfect unison based on mathematical policy at the protocol later.

An LP token can be a hybrid stablecoin if the liquidity provider deposited/staked liquidity into a XRP/USD AMM Pool. This XRP/USD LP token can be used in multitude of ways but the 3 simplest strategies are:

⚠️ WARNING ⚠️ THIS IS *NOT* FINANCIAL ADVICE and is for educational purposes only. I am only trying to demonstrate the different opinions that wil be available for different users

Borrow XRP against your LP token to maintain nearly the same amount of XRP you originally had before depositing the XRP single deposit into pool. This in of itself removes impermanent loss. Since the LP token is comprised of 50:50 XRP/USD this minimizes the chance of liquidation by nearly 50% which is huge. Also, keep in mind you can lower your collateral ratio at any time.
A single deposit USD from an institution may want to limit their exposure to XRP downside volatility as much as possible, by borrowing XRP against against LP token collateral and immediately selling the XRP provides short exposure to XRP Price. There’s a number of other ways to hedge upside and downside volatility using Options and perpetual futures that are maturing in DeFi and have gained significant traction (DyDX, GMX)
You can leverage your Yield Earnings by 3–5X by borrowing the same two assets secured by the LP token as collateral.

Interestingly, the leveraged Yield position creates a market for conservative XRP and stablecoin owners to lend their XRP without any exposure to the AMM Liquidity pools. They can simply lend XRP or Fiat stablecoins and earn the interest the leveraged yield farmer pays in interest. Best of all they always guaranteed to get back the assets that they want because they are guaranteed by the Ledger itself. This is called secured lending and will be very appealing to many XRP owners. Interestingly, their assets do end up contributing equality to the AMM. They just are not exposed to the AMM pool or any impermanent loss.

This is the beauty of implementing at the Protocol Layer, because it increases safety and reduces risk for users of applications that typically have much higher risk and lower safety.

This transformation is monumental, and XRP is poised to become one of the world’s most enticing investments. It can be seamlessly deposited as liquidity, subsequently tokenized into a hybrid, semi-decentralized yield-bearing super-premium collateral asset. This asset offers lower volatility than holding traditional cryptocurrencies, making XRP an irresistible investment opportunity. Its utility as liquidity will soon be accessible to ALL, from retail to institutional investors, once the amendment passes.

💦 LIQUIDITY’ is the LIFEBLOOD🩸 of the “ INTERNET of VALUE”

Ripple’s Expanding Role:

Ripple is not stopping at AMM pools; they will are building powerful infrastructure for data analytics used by machine learning and AI. RippleNet is evolving into an application layer network, supported by PRISMA, the intelligent Liquidity Aggregator system, which interacts seamlessly with different blockchains and exchanges.

XRP Ledger was designed and built as a public permission-less blockchain that is readily accessible retail and help enhance compliance for Enterprises. An Application Platform for everyone:

RippleNet is evolving beyond being an enterprise payment network. It’s becoming an application platform that supports additional utility for XRP as liquidity. The ultimate goal is to channel all liquidity and volume onto the XRP Ledger, creating a primary market and an economic model for XRP. This is not speculation but fact, David Schwartz has confirmed in recent Twitter spaces that “THERE’S A MAJOR EFFORT UNDERWAY TO INTEGRATE ODL INTO THE XRP LEDGER DEX/AMM’s"

In conclusion, the introduction of AMM pools on the XRP Ledger is a monumental milestone. It unifies liquidity, provides continuous yield, and positions XRP as a leader in the world of digital assets. The possibilities are endless, and it’s clear that Ripple is committed to pushing the boundaries of what XRP can achieve. The future looks bright for the XRP community! 🚀💧🌎

Prepare for a paradigm shift — XRP is about to redefine investment as we know it. ✨

Link

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What’s Next for PYTH?

For the bullish fractal to fully play out, PYTH will need to close decisively above the $0.1235–$0.1481 zone, ideally on rising volume. A confirmed breakout could open the door to the first upside target of $0.21, representing roughly 78% potential gains from current levels.

However, confirmation is key. Until PYTH clears these moving average hurdles, it remains vulnerable to extended consolidation or even a false breakout. Still, the fractal similarity to SKL is hard to overlook — and if history repeats, PYTH bulls could be on the verge of a major move.

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August 16, 2025

Deep Dive into Pyth Network 💎💎💎💎💎

👉From November 2024😉

What are Oracles?

Blockchains in and of themselves are useful already, for trustless and permissionless transactions without censorship. No trust or verification from the user is required because it is stored on a decentralised ledger with global consensus. What if certain transactions require reliable and real-time data from external sources that do not necessarily have a global consensus or can be stored on the same ledger? For example:

Products that rely on price feeds of assets from other blockchains or real-world markets: Many decentralized finance (DeFi) applications, like decentralized exchanges or lending platforms, need accurate and timely information about asset prices (e.g., stocks, cryptocurrencies, commodities). Since these prices are continuously changing in real-world markets, blockchains need a way to securely access this off-chain data.
Products that require verifiable and secure random numbers: Randomness is crucial for a variety of blockchain use cases, such as lotteries, gaming, and even secure cryptographic protocols. However, generating truly random numbers on-chain is challenging without introducing bias or predictability. Off-chain randomness, when provided by a reliable source, is often needed.
Products dependent on historical price data: Some DeFi platforms and financial products might need access to archived price data for risk assessment, backtesting trading strategies, or offering historical analysis. Since blockchains primarily focus on storing current state information, they need external sources to provide this historical data efficiently.

To address these challenges, Oracles were introduced. Oracles serve as bridges between blockchains and the external world, providing smart contracts with access to off-chain data. They connect external data providers—such as market data owners, web APIs, or IoT devices—to decentralized applications across multiple blockchains. Oracles enable these applications to securely and reliably obtain real-time data, execute transactions based on external events, and interact with data that cannot be directly stored on-chain.

Why can this data be trusted? Oracles provide a robust mechanism for ensuring the integrity and reliability of off-chain data before it is used on the blockchain. An oracle network verifies the:

Authenticity: To ensure that the data is genuine and comes from a legitimate source, oracle networks source data from multiple trusted providers or verifiable APIs. This process reduces the risk of malicious or false information being introduced into smart contracts.
Accuracy: Accurate data is crucial for smart contracts to function correctly. Oracles achieve this by aggregating data from several independent sources. Instead of relying on a single provider, an oracle network will query multiple data sources and compare their responses.
Reliability: Oracle networks enhance reliability by using decentralized nodes, which increases resilience against failures or malicious activity. If one data source or node fails or provides incorrect information, the other nodes in the network can continue to operate and provide valid data.

The demand for accurate and reliable off-chain data is growing as the number of real-world use-cases and adoption of blockchain increases. Users of applications are more than willing to pay for an oracle service that is accurate and reliable and covers a large variety of use-cases.

Pyth Network versus Other Oracles

Read the blog post of Battle of the Oracles to learn more about the different oracles solutions. To recap, Pyth Network is a high-frequency oracle leveraging Solana's technology, offering a robust solution for off-chain data sharing for primarily decentralized finance applications (DeFi). It provides services like real-time price feeds and benchmarks, accessible to a wide range of financial service providers. PYTH is the governance token and utility token of the Pyth Network. Supply and demand for the PYTH token is directly related to level of usage and total demand of Pyth’s services and Pyth Network’s Tokenomics.

Total Value Secured by Oracles

While Chainlink holds the lion’s share of the total value secured by oracles, Pyth has shown by far the largest growth in terms of TVS, number of protocols supported and number of DApps. Pyth is expanding rapidly, across different networks and protocols, supporting more DApps, data providers and integration partners every day. In the same time frame, Chainlink’s marketshare has decreased. Comparing the main metrics of MCAP/TVS ratio and MCAP/TTV ratio, we notice that based on market capitalization (circulating supply), Pyth is undervalued whereas the TVS ratio based on fully diluted value paints a different picture. This is because only 37% of PYTH tokens are unlocked, the next significant PYTH token unlock takes place in May of 2025 and happens yearly thereafter on the same date until the full amount of tokens has been unlocked by 2027.

Use-cases Enabled by Pyth

Products and Services:

Price Feeds: real-time market data for smart contracts, blockchains, and applications
Benchmarks: historical market data for smart contracts, blockchains, and applications
Express Relay: smart contracts or protocols that need protection against MEV (Express Relay) Express Relay is one of a kind product that offers developers to auction off valuable transactions directly to MEV searchers without validator interference
Entropy: smart contracts that require secure on-chain random numbers. Secure and verifiable random numbers are incredibly important for creating a fair and unpredictable on-chain actions (e.g., for games)
Pyth DAO Governance model

Examples:

Decentralised Exchanges (DEXs) require reliable real-time price feeds to provide users accurate trades.
Pyth’s data pull model provides data directly from the source, such as exchanges, market makers or DeFi protocols. Because data is pulled only on demand and not pushed at a given interval, it scales efficiently, and costs are offloaded to users where updates are demand-based.

Case Study: Drift (DEX)

Refresher: What is a DEX?

Decentralized Exchange (DEX) allows users to trade cryptocurrencies directly, without intermediaries, using smart contracts on a blockchain. DEXes operate peer-to-peer, providing greater privacy and control over assets compared to centralized exchanges.

There are two main types of DEXes:

Order Book DEXes: These platforms match buy and sell orders using a live order book, similar to traditional exchanges. Examples include dYdX.
Automated Market Makers (AMMs): AMMs use liquidity pools and algorithms to determine asset prices, allowing users to trade instantly without needing a counterparty. Examples include Uniswap and SushiSwap.

Context

Drift is a perpetual trading DEX built on Solana. Speed, reliability, and performance make or break a perpetual trading ecosystem. Drift is a perpetual trading platform that allows traders to create leveraged positions against the performance of synthetic assets.

Why Pyth?

Drift seeks to offer the most feature-rich, powerful perpetual DEX with lightning-fast execution. This ambition necessitates a robust Oracle solution. Legacy oracles are slow and susceptible to front and back running.

Pyth and Drift partnered to rapidly deploy a proof-of-concept. This successful relationship satisfies the ultra-fast network requirements of Drift’s execution tools and is capable of supporting thousands of users and hundreds of assets.

This is only one of many examples of an effective partnership and integration that gives Web3 users an enhanced user experience than DApps that use other Oracle solutions. There are presently over 410 integration partners supporting the transition from push to pull Oracles with Pyth Networks.

Pyth versus Chainlink

We compare Chainlink and Pyth Network with two main metrics: Total Value Secured (TVS) and Total Transaction Volume (TTV)

Total Value Secured

Pyth’s Total Value Secured (TVS) is more distributed across different blockchains and applications compared to Chainlink, offering greater resilience and diversification. Here's how the comparison breaks down:

Blockchain Distribution: Pyth’s TVS shows a broader spread across multiple blockchains. For instance, only 61.1% of Pyth’s TVS is concentrated on the Solana blockchain, which means the remaining value is distributed across other blockchains, contributing to its decentralized footprint. In contrast, 97.1% of Chainlink’s TVS is concentrated on Ethereum, creating a higher dependence on a single blockchain. This heavy reliance on Ethereum makes Chainlink more vulnerable to network-specific issues, such as scalability concerns or market downturns affecting Ethereum.
Application Distribution: Pyth also demonstrates a healthier diversification across different applications. Only 23.8% of Pyth’s TVS is tied to its top application, meaning the remaining value is distributed among various other applications. This broader application spread lowers the risk of one dominant app affecting the network’s overall performance. Chainlink, however, has 48.8% of its TVS tied to its top application, meaning nearly half of its secured value relies on a single application. This concentration creates a potential single point of failure, making Chainlink more sensitive to shifts in the usage or success of that key application.

Pyth's more balanced distribution of TVS across different blockchains and applications enhances its resilience. With a healthier spread of its value, Pyth is better positioned to withstand market fluctuations or downturns that may affect individual blockchains or applications, making it less exposed to risks associated with dependency on any single network or product. This diversified approach gives Pyth a structural advantage in terms of long-term stability and adaptability.

Total Transaction Volume

Another, perhaps better, metric to measure the true market share and usage of an Oracle network is TTV (Total Transaction Volume). TTV is strongly correlated with the frequency of oracle price updates and therefore oracle revenue and true demand for its products and services. TVS can overstate or understate an application’s demand for price updates, because an application could have a disproportionate amount of locked value relative to the amount of Oracle interactions one would expect to observe.

Chainlink, the traditional market leader of oracle networks, is losing ground after being slow to serve customers needing faster data updates, though they've recently launched a new high-speed service. Pyth has become a successful competitor by focusing on rapid data delivery across multiple platforms, making it easier for financial applications to access real-time price information. Large trading platforms are increasingly building their own internal price tracking systems rather than paying external providers, suggesting cost is a major factor in their decisions.

The key to future success in digital trading will be speed - traditional exchanges currently have an advantage with their centralized systems, but new platforms are starting to close this gap by developing faster price update capabilities.

Pyth Network Governance

The Pyth Network operates a decentralized governance system that empowers the community by allowing all PYTH token holders to have a direct say in the network's development and decision-making processes. This decentralized governance model ensures that control of the network is distributed among its users, promoting transparency and inclusion.

To participate in governance, token holders must stake their PYTH tokens through the Pyth staking program. By staking their tokens, users gain the ability to vote on community governance proposals, ensuring that they have a voice in the key decisions shaping the future of the Pyth Network.

In addition to voting, any PYTH token holder has the right to submit proposals to the Pyth DAO, provided they meet the requirement of holding and staking at least 0.25% of the total PYTH tokens staked. The proposals that can be brought to the DAO are diverse and impact many critical aspects of the network's functionality, including:

Determining the size of update fees: Proposals can influence the fees charged for updates to the network, ensuring that they remain fair and competitive.
Reward distribution mechanisms for publishers: The community can vote on how rewards are allocated to data publishers, ensuring that those contributing accurate and reliable data are fairly compensated.
Approving software updates across blockchains: The Pyth Network operates across multiple blockchains, and governance participants have the power to approve essential updates to on-chain programs, ensuring the network remains up to date and secure.
Listing price feeds and determining their reference data: Token holders can vote on which price feeds are listed on Pyth, as well as set the technical parameters for these feeds, such as the number of decimal places in the prices and the reference exchanges used to determine the data.
Selecting data publishers: The governance system allows the community to permission publishers, or select which entities are allowed to provide data for each price feed. This ensures that only trusted and verified data sources are contributing to the network.

Conclusion

The Pyth Network stands out as a disruptive force in the decentralized oracle space, rapidly growing across protocols and blockchains and setting new standards for both data speed and diversification. Leveraging Solana technology, Pyth brings high-frequency, real-time market data directly from first-party sources—including exchanges and trading firms—to an expanding universe of DeFi and TradFi applications. Compared to its primary competitors, Pyth demonstrates healthier resilience by distributing its Total Value Secured across multiple blockchains and applications, reducing dependencies and systemic risk.

Recent market trends show Pyth gaining ground in metrics like Total Transaction Volume, challenging traditional leaders like Chainlink and reflecting a broader shift toward fast, reliable, and diversified data solutions in decentralized finance. Its innovative approach—such as direct publisher sourcing, sub-second updates, and auditable aggregation—addresses the needs of financial markets with unique precision and transparency.

Ultimately, for developers, institutions, and investors seeking reliable off-chain data with speed and global reach, Pyth Network is quickly becoming a cornerstone oracle solution—and its trajectory signals a new era of dynamic, decentralized connectivity for global finance.

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August 02, 2025

Understanding the Crypto Alt Season

The next altcoin season is poised to ignite the crypto market, promising to turn savvy investors' portfolios into goldmines. As Bitcoin's dominance wanes, a new era of blockchain innovation is dawning—are you ready to ride the wave?

Market behavior often exhibits distinct patterns and cycles. One such phenomenon that has captured the attention of traders and investors alike is the "Alt Season"—a period when alternative cryptocurrencies, or "altcoins," outperform Bitcoin and experience significant price surges.

The concept of market cycles and seasonality is not unique to crypto; it's a well-established principle in traditional financial markets. However, in volatile crypto space, these cycles can be more pronounced and occur with greater frequency.

In this article, we’ll try to cover these and other topics:

The nature and characteristics of Alt Seasons
The importance of recognizing market cycles in cryptocurrency trading
Alt Season indicators and how to interpret them
Predictions and speculatins about the next potential Alt Season

What Is Crypto Alt Season?

Crypto Alt Season, short for "Alternative Cryptocurrency Season," refers to a period in the cryptocurrency market when alternative cryptocurrencies (altcoins) significantly outperform Bitcoin in terms of price appreciation. During an Alt Season:

Many altcoins experience rapid price increases.
The market share of altcoins grows relative to Bitcoin.
Trading volume for altcoins typically increases.
Investor attention shifts from Bitcoin to various altcoin projects.

An Alt Season can last anywhere from a few weeks to several months. It's often characterized by increased risk appetite among investors, who are willing to allocate more capital to smaller, potentially higher-risk crypto projects in search of higher returns.

Is Crypto Season the Same As Crypto Alt Season?

While related, Crypto Season and Crypto Alt Season are not exactly the same:

Crypto Season:
- Refers to a broader bullish period in the entire cryptocurrency market.
- Typically includes price appreciation for both Bitcoin and altcoins.
- Can be longer in duration, sometimes lasting for many months or even a year or more.
- Often starts with a Bitcoin rally, followed by increased interest in the broader crypto market.
Crypto Alt Season:
- Specifically focuses on the outperformance of altcoins compared to Bitcoin.
- Can occur within a broader Crypto Season but is more narrowly defined.
- Generally shorter in duration than a full Crypto Season.
- May happen towards the latter part of a broader Crypto Season, as investors seek higher returns in smaller cap coins.

Key Differences:

Scope: Crypto Season encompasses the entire market, while Alt Season focuses on altcoins.
Duration: Crypto Seasons are generally longer than Alt Seasons.
Market Dynamics: In a Crypto Season, Bitcoin often leads the rally, while in an Alt Season, altcoins outperform Bitcoin.

It's important to note that these terms are not officially defined and can be subject to different interpretations within the cryptocurrency community. However, understanding the distinction can help investors and traders better analyze market trends and potential opportunities in different segments of the crypto market.

What Is Alt Season Indicator?

The Alt Season Indicator is a tool used by cryptocurrency traders and investors to gauge whether the market is entering or currently in an "Alt Season" — a period when altcoins are outperforming Bitcoin. While there isn't a single, universally accepted Alt Season Indicator, several metrics and tools are commonly used to assess the likelihood of an Alt Season. Here are some key aspects of Alt Season Indicators:

Bitcoin Dominance

One of the most widely used indicators is Bitcoin Dominance, which measures Bitcoin's market capitalization as a percentage of the total cryptocurrency market cap.

Calculation: (Bitcoin Market Cap / Total Crypto Market Cap) * 100
Interpretation: A declining Bitcoin Dominance often signals a potential Alt Season, as it indicates that capital is flowing from Bitcoin into altcoins.
Threshold: Some traders consider Bitcoin Dominance below 50% as a potential indicator of an Alt Season.

Altcoin Market Cap Ratio

This indicator compares the total market capitalization of altcoins to Bitcoin's market cap.

Calculation: Total Altcoin Market Cap / Bitcoin Market Cap
Interpretation: An increasing ratio suggests growing strength in the altcoin market relative to Bitcoin.

Top 10 Altcoins Performance

This indicator tracks the performance of the top 10 altcoins by market cap (excluding Bitcoin) compared to Bitcoin over a specific period.

Calculation: Average percentage gain of top 10 altcoins vs. Bitcoin's percentage gain
Interpretation: When a majority of top altcoins consistently outperform Bitcoin, it may indicate an Alt Season.

Alt Season Index

Some crypto data platforms offer a proprietary Alt Season Index, which combines various metrics to provide a single score indicating the likelihood of an Alt Season.

Scale: Often presented as a percentage or a 0-100 score
Interpretation: Higher scores (e.g., above 75%) suggest a higher probability of an ongoing Alt Season

Trading Volume Ratios

This indicator compares the trading volumes of altcoins to Bitcoin's trading volume.

Calculation: Total Altcoin Trading Volume / Bitcoin Trading Volume
Interpretation: An increase in this ratio may indicate growing interest in altcoins, potentially signaling an Alt Season.

Important Considerations:

No single indicator is foolproof. Traders often use a combination of indicators for a more comprehensive analysis.
Market conditions can change rapidly, and past patterns don't guarantee future results.
Different traders may use different thresholds or interpretations of these indicators.
The crypto market's evolving nature means that indicators may need to be adjusted over time to remain relevant.

Understanding and effectively using Alt Season Indicators can help traders and investors make more informed decisions about allocating their resources between Bitcoin and altcoins. However, it's crucial to combine these indicators with broader market analysis and risk management strategies.

Alt Seasons: Historical Perspective, Current Situation, and Future Predictions

Previous Altcoin Seasons

In crypto, two periods stand out as particularly significant for altcoins. These "alt seasons" saw unprecedented growth and interest in cryptocurrencies beyond Bitcoin, reshaping the landscape of digital assets.

The 2017-2018 Alt Season

Duration: December 2017 to January 2018

Context:

Bitcoin (BTC) experienced its most remarkable bull run to date, reaching nearly $20,000 in December 2017.
This surge in Bitcoin's price and public interest created a ripple effect throughout the crypto market.

Key Developments:

Proliferation of New Coins: The success of Bitcoin catalyzed the launch of numerous new cryptocurrencies.
Investor Frenzy: Buoyed by Bitcoin's success, investors eagerly sought the "next Bitcoin," pouring capital into various altcoins.
ICO Boom: This period saw a surge in Initial Coin Offerings (ICOs), with many projects raising millions in a matter of hours or days.
Market Expansion: The total cryptocurrency market cap reached unprecedented levels, briefly surpassing $800 billion in January 2018.

Notable Altcoins: Ethereum (ETH), Ripple (XRP), and Litecoin (LTC) saw significant price increases during this period.

The 2020-2021 Alt Season

Duration: December 2020 to April 2021

Context:

Bitcoin broke its previous all-time high, surpassing $60,000 in March 2021.
The COVID-19 pandemic had accelerated digital adoption and increased interest in alternative investments.

Key Developments:

DeFi Explosion: Decentralized Finance (DeFi) projects gained massive traction, with many tokens seeing exponential growth.
NFT Boom: Non-Fungible Tokens (NFTs) entered the mainstream, driving interest in blockchain-based digital assets.
Institutional Adoption: Major companies and institutional investors began adding cryptocurrencies to their balance sheets.
Technological Advancements: Many altcoins introduced innovative features, scaling solutions, and use cases.

Notable Altcoins: Ethereum (ETH) reached new highs, while projects like Binance Coin (BNB), Cardano (ADA), and Polkadot (DOT) saw remarkable growth.

Comparative Analysis: Both alt seasons shared some common characteristics:

They were preceded by significant Bitcoin price rallies.
New projects and tokens gained rapid popularity and valuation.
Retail investor participation increased dramatically.
The overall cryptocurrency market capitalization reached new heights.

However, the 2020-2021 alt season was marked by greater institutional involvement and a broader range of technological innovations, particularly in DeFi and NFTs.

Is It Alt Season?

Based on the indicators discussed above, it's not currently an altcoin season. The Altcoin Season Index at 41 and Bitcoin's market dominance at 61.3% both suggest that Bitcoin is still the dominant force in the crypto market at this time.

When Is Alt Season?

Based on the information we could gather from various experts, we can analyze the predictions for the next altcoin season as follows:

Based on the latest analysis from experts and on-chain data, here’s what we know about the next altcoin season:

Current Status (August 2025):

The altcoin season index—a metric that signals how many altcoins outperform Bitcoin—currently sits around 37. For a “full-blown” alt season, it typically needs to rise above 75.
Bitcoin dominance is approximately 61-62%. Historically, dropping below 60% often coincides with a rapid rotation into altcoins and the start of alt season.

Key Indicators to Watch:

Altcoin Season Index (ASI): Above 75 signals a true altcoin season.
Bitcoin Dominance: A move below 60% usually marks the transition; sub-50% dominance is associated with peak alt season inflows.
Market Activity: Increasing volumes in major altcoins and Layer 1s, meme coin rallies, and spikes in DeFi activity are early warning signs.
Ethereum Outperformance: When ETH surges relative to BTC, this historically precedes broader altcoin rallies.

Expert Predictions for 2025:

Analysts point to a pivotal window for alt season starting as early as August 2025 and extending through the fall, with many expecting true acceleration of altcoin gains if Bitcoin’s price consolidates and capital rotates further into alts.
There is strong consensus that macroeconomic catalysts, such as potential U.S. interest rate cuts and ongoing Bitcoin ETF momentum, could fuel a major altcoin rally in late 2025 if positive conditions persist.

Summary Table: Key Factors & Targets

Signal	Alt Season Trigger	Status (Aug 2025)
Altcoin Season Index (ASI)	>75	~37
Bitcoin dominance	<60%	~61–62% (near trigger)
Altcoin trading volume	Sustained surge across many alts	Rising, but not explosive
Ethereum outperformance	ETH/ BTC breakout, >$3,700	Near, ETH ~$3,500
Market narratives	AI, DeFi, meme coins, new L1 inflows	Strengthening

Bottom Line:
Most analysts agree the groundwork for altcoin season in 2025 is building. We are currently in a transition phase: if Bitcoin dominance continues to fall and the Altcoin Season Index rises above 75, a full-fledged alt season could ignite during the second half of 2025. Monitor these key indicators to stay ahead as market momentum shifts from Bitcoin into a broader range of altltcoins.

Key Factors to Consider

Technology: Look for coins with innovative solutions to existing blockchain challenges.
Adoption: Consider projects with growing partnerships and real-world use cases.
Market Position: Established coins with room for growth may offer a balance of stability and potential returns.
Tokenomics: Understanding supply dynamics can help predict potential price movements.

It's crucial to conduct thorough research before investing. The cryptocurrency market is highly volatile, and past performance doesn't guarantee future results. Always invest responsibly and within your risk tolerance.

How to Win in Next Alt Season?

Capitalizing on the next altcoin season requires a strategic approach. Here's how to maximize potential gains:

Research and Diversification: Thoroughly research potential investments, analyzing both fundamentals and technical aspects to identify promising altcoins. Diversify your holdings across different projects to mitigate risk and maximize potential returns. Don't put all your eggs in one basket.
Strategic Timing: Utilize technical analysis tools like support/resistance levels and RSI to pinpoint optimal entry and exit points. Monitor market sentiment and price trends to make informed decisions. A clear entry and exit strategy is crucial for managing risk and maximizing profits during volatile periods.
Newer Projects: Consider participating in newer altcoin projects. This provides early access to potentially high-growth projects at discounted prices. Research upcoming defi projects with use cases, focusing on innovative projects with strong potential. Investing early can yield substantial returns as the project develops.

Conclusion

In summary, an altcoin season, marked by significant price increases in non-Bitcoin cryptocurrencies, may be on the horizon. This potential surge could be driven by investors seeking higher returns in smaller-cap cryptocurrencies, technological advancements in altcoin projects, increased blockchain adoption, and the transition of projects from speculative ventures to real-world applications.

Remember, while the potential for significant gains exists during an altcoin season, the cryptocurrency market remains highly volatile. Always invest responsibly.

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