What is auto-bridging in XRPL?
XRP Ledger (XRPL) is one of the fastest and most efficient blockchains for transferring value, not just XRP, but any tokenized asset on it (stablecoins, fiat IOUs, and even CBDCs).
To achieve this, XRPL uses a unique feature called auto-bridging.
The auto-bridge allows XRPL to route payments between two assets, even if there is no direct market between them, using XRP as an invisible bridge.
XRP is used as a bridge asset to facilitate faster, cheaper, and more efficient cross-border payments through Ripple's payment network, RippleNet.
Here is a simple example: 🧠
Anita wants to exchange $GBP for $BRL, but the direct market lacks liquidity.
Since both $GBP and $BRL have active markets with XRP, the XRP Ledger's auto-bridge is activated.
First, she exchanges $GBP for XRP and then XRP for $BRL, providing Anita with the best possible rate by combining offers across multiple markets.
Why is XRP perfect for this?
The auto-bridge only works if there is a liquid, fast, and neutral asset that:
•Exists natively on the XRPL
•Can be traded with many other tokens
•Has low fees and quick settlement.
That is exactly what XRP is.
It is the default bridge asset on the XRP Ledger.