David Schwartz, CTO of Ripple, recently shared his views on the challenges related to the decentralized exchange (DEX) on XRP Ledger and proposed possible solutions.
Challenges of Using Ripple's DEX
In a recent video post, David Schwartz expressed frustration that Ripple, as a regulated entity, is facing significant difficulties using the decentralized exchange on XRP Ledger. He noted that regulatory requirements hinder the company from using the DEX if there is any risk of transactions with sanctioned entities. "And a thorn in the side of Ripple for a long time has been the fact that we can’t use the XRP Ledger DEX for our own payment products. Like, this just, I want to rip my hair out. So like, it’s obvious that we would do that. And it’s frustrating that we, endlessly frustrating that we can’t. And the primary obstacle is that Ripple is a regulated institution," Schwartz stated.
Proposal for Permissioned Domains
Schwartz proposed a solution through the introduction of permissioned domains on the XRP Ledger, which would require participants to prove they are not sanctioned individuals before gaining access. This approach, as he explained, is designed to ensure compliance with regulatory requirements while still enabling broader access to liquidity. "We are not looking to restrict access solely to large institutions but also to allow ordinary individuals to participate in these permissioned environments," he added.
Impact on Institutional Adoption
Schwartz also underscored the potential significance of these developments for driving institutional adoption of the XRP Ledger. He mentioned that once permissioned domains are implemented, enterprises will be able to use the DEX for settling payments, moving assets, and providing liquidity, all while complying with regulations. "Finally, enterprises that want to use the DEX to settle payments and move assets will be able to do so," he concluded. Increased activity and liquidity on the DEX would benefit the entire developer ecosystem on the XRP Ledger.
Thus, David Schwartz highlights key aspects regarding decentralized liquidity and its development within regulatory frameworks, which may expand participation and value on the XRP Ledger.
