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- Schwartz highlights XRP’s volatility and potential for gradual appreciation, akin to Bitcoin.
- AMMs can leverage crypto volatility for sustainable yield, says Schwartz.
- Realistic returns and risk management are key in DeFi investments, per Schwartz.
In a recent statement, Ripple’s Chief Technology Officer, David Schwartz, addressed queries about the XRP token’s appreciation potential and its role in passive income generation. Amid the crypto community’s conversations, particularly on the XRP Ledger’s automated market maker(AMM), Schwartz offered opinions on XRP’s nature and the comparison of long-term Bitcoin behavior.
Here is a chart of bitcoin over the past 12 years on a log scale. The long-term behavior is that of gradual appreciation.When evaluating things like AMMs or staking, I generally evaluate them as an alternative to long-term holding which gives you this long-term gradual… pic.twitter.com/KK718g0c1k— David "JoelKatz" Schwartz (@JoelKatz) March 10, 2024
He highlighted XRP as a high-volatility asset, akin to many cryptocurrencies, but noted its gradual appreciation pattern similar to Bitcoin’s over the past 12 years. Schwartz’s comments came at a crucial time when the discourse around XRP and passive income generation through DeFi products like AMMs is gaining momentum. He pointed out the misconceptions surrounding DeFi products and the risks involved, emphasizing the need for realistic expectations about returns.
Digital assets have a lot of volatility. AMMs let you turn that volatility into yield, get yield from making markets, and they reduce your risk of losses due to long-term price decreases.I suspect people who feel the way you do are looking for something even riskier that…— David "JoelKatz" Schwartz (@JoelKatz) March 11, 2024
The Ripple CTO underscored the potential of AMMs in leveraging cryptocurrency volatility to produce yield, mitigating the risks tied to long-term price fluctuations. This approach, according to Schwartz, offers a sustainable avenue for yield generation, contrasting with the higher risks associated with seeking more significant returns from speculative ventures.
By likening XRP’s long-term behavior to Bitcoin’s, Schwartz addressed concerns within the community about XRP’s perceived lack of gradual appreciation. He posited AMMs and staking as viable alternatives to mere long-term holding, presenting them as strategies to generate income while acknowledging the volatility inherent in digital assets.
“When evaluating things like AMMs or staking, I generally evaluate them as an alternative to long-term holding which gives you this long-term gradual appreciation.”
Through his discourse, Schwartz not only clarified the nature of XRP but also highlighted the broader implications of integrating AMM functionalities within the XRPL. His insights serve to educate the community on the nuanced dynamics of digital asset investment, emphasizing the balance between yield generation and risk management in the volatile cryptocurrency market.
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