The question that is always quite a bit heated up and not properly comprehended in the cryptocurrency field is: Exactly is the XRP Ledger decentralized? The debate has been brewing since Ripple Labs introduced the ledger in 2012, and has flared up many times since, most notably in August 2025 when blockchain analytics company Kaiko ranked XRPL last among 15 major blockchains for network security, and again in February 2026 when Cyber Capital founder Justin Bons and Ripple’s very own chief architect David Schwartz got into a public spat over one of the most substantive blockchain governance debates in living memory.
The technical architecture is not the only point that is so important in this debate. It raises a more fundamental philosophical question about what decentralization really means, who will have the final say on its definition, and whether the criteria followed by XRPL are followed by all other projects in the industry. The answer is consequential for investors, developers, and institutions developing on the ledger for trust, regulatory treatment, and value. XRP has always been in the limelight, and even rumours about Elon Musk’s connection with XRP ignited a frenzy in the market.
It presents all the arguments on all sides, provides the newest available information, and provides you with a framework to make your own well-informed decision.
The meaning of Decentralisation and why it’s important to define
It is important to have an understanding of what decentralization actually entails before diving into the specifics of the XRP Ledger, as there is no standard definition and it is at the core of nearly every issue.
De-centralization, in the widest sense of the word, is the lack of a central point of control. A network is decentralized when there is no single entity with the power to change the rules, reverse transactions, censor participants, or close the network. If by that definition the debate is about degree, and not categorical, then you are correct. Even the most decentralized of the lot, Bitcoin, has had periods of concerted action. When a software bug was discovered in 2010 that enabled the generation of 184 billion fake bitcoins, core developers and miners worked together to roll back the Bitcoin blockchain. The network’s stakeholders decided to patch the vulnerability as a group. Whether that’s centralization or not is purely subjective.
A more accurate term is the Nakamoto coefficient, the number of independent entities required to collude to break a network. The higher the Nakamoto coefficient, the more entities would have to cooperate in attacking the system, thereby creating more decentralization. Ranking last in Kaiko’s security assessment primarily by this measure, XRPL fares worse than Ethereum and Bitcoin. Two main reasons for the bad score were the relatively low number of nodes using XRPL and its low Nakamoto coefficient, said a representative of the company.
There is also a third dimension Governance decentralization who decides what changes will be made to the protocol. No single party has veto power and the Bitcoin upgrades must be achieved with rough consensus among the developer, miner and node operator communities. XRPL is an amendment system that relies on validators that need to reach an 80 percent consensus on the network within 14 days to approve the changes that are required in the protocol. Both are distributed governance, but operate differently, and critics say XRPL’s is more vulnerable to non-formal control by Ripple.
It is important to grasp the three aspects of decentralization: operational control, attack resistance and governance, to assess the real merits of the different claims in the current XRP Ledger decentralization debate.
How does the XRP Ledger work? The RPCA explained
The XRP Ledger is based on the Ripple Protocol Consensus Algorithm (RPCA). This is a complete concept change from Proof of Work and Proof of Stake in Bitcoin and Ethereum, and knowing the reason for this difference is essential to the entire discussion.
In the Bitcoin Proof of Work, miners are competing to solve a computationally difficult problem. The first one who completes the puzzle adds the next block and receives the block reward. Security is achieved because a lot of energy is spent. Once a transaction gets reversed, all the blocks after it will have to be re-mined and this is exponentially increasing the more blocks that are added. The openness of the system is a strength: it is open to any individual with hardware and electricity.
The switch to Ethereum’s Proof of Stake protocol abandoned the energy consumption for economic stake. Validators have locks that hold Ether as an investment. They can be slashed from that stake if they behave dishonestly. The economic cost of misbehaviour provides security. Anyone can participate who can stake to the minimum threshold, but there is considerable concentration among large staking pools.
The XRP Ledger has a different approach altogether. On XRPL, the process of validation is trust-based, so no need for mining or staking. Each full node on the network has a Unique Node List of validators it will trust. Each validator on a node’s UNL votes on a new batch of transactions when they need to be confirmed. Once it is agreed by at least 80 percent of the trusted validators that the transactions are valid and ordered, they are permanently added to the ledger. The whole operation takes only 3-5 seconds.
The validators receive no reward for blocks. There is no risk of collateral being staked. Validators join for the reasons of supporting network integrity or for business reasons. This design removes the economic incentives for mining to concentrate in Bitcoin, but another dynamic is created: how can validators be kept honest and diverse without economic skin in the game?
Currently, the network processes up to 1500 transactions per second and each transaction has a fee in fractions of a cent, which is generally less than $0.0002. Since launching in 2012, the ledger has seen more than 4 billion transactions and has now seen its daily transactions cross 3 million, up from around 1 million in mid-2025. Data reveals that the stablecoin ecosystem on the XRP Ledger has significantly expanded by the end of Q1 2026, with Ripple’s own RLUSD increasing by 45 percent to $340.3 million and emerging as the market leader.
These kinds of performance numbers are pretty impressive and are used as an argument by XRPL defenders. A network that’s able to settle transactions quicker than any direct rival does, for a sliver of a cent, with 13 years of uninterrupted service and absolutely no core network breaches, is doing something right, whether or not they’re being given a good score on a Nakamoto coefficient matrix.
The Unique Node List: The Heart of the Controversy
To fully grasp why the XRP Ledger decentralization discussion never ends, it’s necessary to get into the specifics of the Unique Node List.
Each node on XRPL selects the validators it trusts, known as the UNL. In theory, gives the system maximum flexibility. Any individual is able to operate a validator, and any node operator can decide to trust any group of validators he/she wishes. If you don’t trust the validators of Ripple, you can just remove them from your UNL.
In practice, the situation is more constrained. Ripple Labs publishes a suggested default UNL, which is a list of validators that are considered reliable and trustworthy. This is the default list to use by most node operators since it can be time consuming and difficult to develop and monitor a separate UNL. The XRPL Foundation has its own recommended UNL as an alternative, but most network participants stick to Ripple’s UNL or a close alternative to it.
According to the latest public statistics, there are currently more than 150 active validators on the XRP Ledger, of which 35 are on the default recommended UNL. The ripple network comprises a single ripple node that is managed by Ripple Labs. Of course, the fact that the list that most node operators follow is published by Ripple is the source of control, not the number of validators that Ripple actually controls, but that’s what most critics, most strongly in Justin Bons’ February 2026 critique, say.
The technical issue in terms: If a node operator chooses to use a UNL that is significantly different from the accepted UNL list, then the node’s ledger may not agree with the rest of the network. This is not merely theoretical. The nodes whose UNL overlaps with the majority, but is not enough, are at risk of splitting away from the main chain. In practice, this means that the UNL system is open in theory, but of course, there are economic and practical reasons that make everyone stay on the recommended list, which Ripple publishes.
This was, in essence, Bons’ Proof-of-Authority system. He claimed that it is a requirement to connect to a validator list published centrally, which is essentially equivalent to a publisher’s permission to take part in network consensus. In his words, the permissionless framing is a facade on top of an actual system of authorities and federations.
Schwartz and XRPL developers rebut this idea by stating that influence is not control. Ripple is unable to make changes to transactions, reverse history, or protocol rules without the consent of the validator community. For any amendment of the protocol, the required agreement from the active validators is 80% within the two-week amendment window. The changes must be made by a group of validators, with one validator from the default UNL, over 35 validators being enough to push the changes. The mathematics of the system can only do so much with Ripple’s social and reputational sway over validators appearing in the default list.
Ripple’s role: Influence vs Control: Understanding the true distinction
To discuss the XRP Ledger decentralization argument, it is best to distinguish between two separate concepts that people tend to mix up: influence and control.
Ripple Labs has a significant impact on the XRPL ecosystem. It uses many of the core developers of the XRPL software, Ripple. It will release the default recommended UNL. It has historically set the roadmap for new features and amendments to the protocol and is responsible for the XRP Development Fund. Ripple Labs’ statements about the direction of the network have some gravitas for those who listen to it. After all, the resources, expertise, and reputation that the company has built in the ecosystem are of great weight.
However, control is different. Control, the capacity to act unilaterally on the rules of the network. By Schwartz’s own testimony, and according to the design of the RPCA, Ripple cannot initiate a transaction, cannot reverse a confirmed ledger, and can’t change the protocol without the support of 80 percent of the validators, held for two weeks. In February 2026, Schwartz said Bons’s assertion of “absolute power” was “objectively nonsensical” because a Bitcoin miner with a majority of hash power could just print a billion new coins. The miner would have a tremendous influence over mining, but he/she couldn’t break the protocol rules of Bitcoin like Ripple can break the protocol rules of the XRP Ledger. This is a distinction that is very important when considering the centralization claim. If the standard is that no one entity should have disproportionate influence, then XRPL is definitely failing that criterion. Ripple Labs has disproportionate influence compared to the rest of the players. But if your standard is ‘no single entity should be able to unilaterally break the rules of the protocol,’ the picture is much more complicated.
The middle ground, scenarios that are not strictly speaking protocol violations but have far reaching consequences, is the place where the tension is going to lie. What if Ripple chooses to remove a validator from their recommended UNL? If other nodes started following Ripple’s lead, that validator’s consensus power would drop significantly. This is NOT a protocol-level action, but rather one of the powers that no other player on the network has as much as. Bons and others say this is functional control without formal control, and that is not something that should be disregarded.
This is complicated by the problem of supply concentration of XRP. 100 billion XRP were pre-mined at the launch of XRPL in 2012. Ripple Labs received 80 billion of these tokens, the rest went to the founders. To alleviate the issue of supply concentration, Ripple in 2017 locked 55 billion XRP in a cryptographic escrow, adding up to 1 billion tokens to the escrow each month until the tokens are used. As of the end of 2025, more than 59.8 billion XRP tokens were in use, with around 4.74 billion tokens held in Ripple-controlled wallets, which is significantly lower compared to pre-escrow days but still provides the company with a large market share.
The Kaiko Report: What 41 out of 100 really means
On August 13, 2025, Kaiko released its Blockchain Ecosystem Ranking for the second quarter of 2025. XRPL earned a security score of 41 out of the 15 chains that were assessed, which is the lowest of all. Ethereum was the most secure at No. 83. The competitors were close behind in the form of Arbitrum and Solana. The XRPL would still be at the bottom despite Polygon and Stellar achieving 44 and 45 respectively.
The report covered five categories of blockchain: Governance, integration, liquidity, operational efficiency, and security. The security part evaluated the operational resilience, validator decentralization, audit frequency and past incidents. XRPL not only placed last in security with a score of 65 but it also placed last in governance with a score of 65, whereas Ethereum got a score of 85 in governance. In all, XRPL ranked 13th amongst 15 different networks, with a composite score of 57/100. Kaiko’s strategy for measuring blockchain risk is the same as in the wider financial sector; if you want to know more about the inner workings of a numerical risk score, you can check out our full guide to fraud scores.
The low security score was mainly caused by three factors. The first coefficient is the Nakamoto coefficient, which measures the number of independent entities managing significant shares of the validation process. Second, the number of validators is small: as of September 2025, 191 validators were active while approximately 35 were on the default UNL. Thirdly, an April 2025 supply chain attack targeting the XRPL official JavaScript-based development kit, xrpl.js, which is used by developers building on XRPL, was found with a backdoor that can steal crypto assets. Aikido is the security company that first noticed the breach. Most importantly, the main ledger itself remained uncompromised, while merely the toolkit for development was compromised. The incident, however, helped to propel Kaiko’s software infrastructure vulnerability assessment.
The XRPL development team reacted vehemently. The score is misleading, according to RippleX Engineering Head Ayo Akinyele, who noted that there was no incident worthy of such a score in the 13 years the network has been running. He added that XRPL has received top marks in every independent security audit by companies such as CertiK, Halborn, and FYEO. Akinyele added that there was no economic reason for validators on XRPL to collaborate or engage in censorship, and the community could fully reject any validator that acted dishonestly.
But as Akinyele pointed out, there’s a deeper methodological question: should these rankings take into account quantifiable factors such as node distribution and the Nakamoto coefficient, which are used to gauge Proof-of-Work and Proof-of-Stake systems, respectively? However, if applied to a trust-based consensus system such as RPCA, it could potentially undervalue the actual security properties of XRPL. A network containing 191 validators has been secure for 13 years without ever being broken, while a network that contains 500,000 validators has been hacked several times, with evidence of security provided by different groups. It is not actually a matter of dispute whether more validators or actual breach history is a better indicator of real-world security.
This does not mean that the Kaiko ranking is bad. In any blockchain infrastructure, a low Nakamoto coefficient, even with different philosophies, is a clear and worrisome indicator for institutional investors that rely on standard metrics to evaluate blockchain infrastructure. The ranking is based on the way XRPL looks from one specific perspective: one that is commonly employed in professional investment analysis.
The April 2025 Supply Chain Attack: Separating the Issue
The supply chain attack of the xrpl.js SDK that was conducted in April of 2025 should be treated separately from the decentralization argument as it was a separate event, though it was part of Kaiko’s security evaluation.
A supply chain attack is not against the main software but is against the software distribution method by which the software is provided to software developers. The attack in this instance was a malicious party that inserted a backdoor into the official npm package for xrpl.js so it could steal cryptocurrency from wallets created with the compromised version. The attack was orchestrated and may have resulted in the destruction of thousands of applications that have been developed on top of XRPL via that library. The XRP Ledger core consensus layer, validator network, and transaction history remained untouched. There were no reversals. No funds on the ledger itself were stolen. The weakness was only in developer tooling, rather than in the protocol.
RippleX’s reply involved replacing the tainted downloads, adding two-factor authentication for package maintainers and a comprehensive review of its infrastructure. It was commented positively even by critics that the speed of response was noted. One aspect, however, that the decentralization debate often neglects is that decentralization at the consensus level does not mean decentralization at the application and tooling layer. The critical single point of failure, whatever the structure of the validator network is, is if a small set of maintainers controls the main SDK, which developers use to make use of the network. To create a truly resilient ecosystem, it is not sufficient to have distributed validator nodes, but there is a need for distributed maintenance of developer tooling as well. It’s a fair problem that was touched on in Ripple’s 2025 roadmap.
The Bons vs. Schwartz Showdown: February 2026
Justin Bons, the founder and CIO of Cyber Capital, penned a comprehensive critique on X on February 24–25, 2026, accusing XRP, Stellar, Canton, Hedera and Algorand of being “centralized blockchains that defy the core tenets of crypto. His argument was correct: If a consensus mechanism is not PoW or PoS, it is by definition PoA, which is a permissioned system controlled by the entities that publish and maintain the trusted validator lists.
Bons specifically pointed out that XRPL uses the UNL design, which grants the Ripple Foundation and company absolute power and control over the chain, as any node that deviates significantly from the published default list has the potential to lead to a fork out of the chain. In his framing, this design is a permissioned participation of validators, not permissionless.
One of the original architects of the XRP Ledger and CTO Emeritus of Ripple, David Schwartz, responded directly. He said that the claim is “objectively nonsensical,” citing an analogy: “A Bitcoin miner with majority hash power could issue a billion new bitcoins, and that is as nonsensical as saying someone with absolute power over Ripple can create a billion new XRPLs. Bitcoin’s rules are separate from any influencers that exist in the Bitcoin mining power list, and the protocol’s rules are separate from who controls the validator list.
Schwartz also dealt with the particular claim as to double-spending. He said that consensus is a unique feature of XRPL because, even if validators decided to collude, even a super majority of them, could not double-spend and only stop the chain from the perspective of honest nodes. If it were an invalid transaction, an honest node that had honest software would not take it, no matter how many validators attempted to push it through. This is where the technology comes in: The ability to speed up transactions that are confirmed is completely different than the ability to break the rules of the protocol.
Schwartz also compared the 2010 value overflow bug in Bitcoin which, again, was fixed with a coordinated effort among miners and developers. The Bitcoin community made a decision to come together and rewrite history. The community of XRPL also elected not to make a rollback or amend the ledger when it was discovered that a set of 32,000 ledgers had been lost from the early history of the network. But this meant decentralization, not centralization, said Schwartz, pointing out that no one was directing the network as it went.
There was no winner in the traditional sense of the word, as the debate itself did not result in a victory. Contrary to the seeming openness, Bons argued that the practical reality of most nodes running Ripple’s default UNL was a permissioned system anyway. Theoretical openness (with actual protocol constraints) is the proper measure of decentralization, Schwartz insisted. Both arguments were actually quite standard and the crypto community was split on either side.
A Historical Perspective: This Debate Has Been Running for 13 Years
The decentralization controversy of the XRP Ledger is not a new one. It has been a part of the ledger since its inception in 2012, and has matured over several stages, and has been accelerated at critical junctures.
The early years of the ledger were more of a discussion than a reality. Financial institutions and payment processors were the main consumers of XRP, as they were less interested in decentralization as a concept. Ripple’s sales proposition was efficiency: send cross-border payments in seconds at fractions of a cent, a network that’s trusted due to its curated validator network.
It raged even further when XRP became a familiar part of the crypto consciousness around 2017-2018, and it was compared against the decentralization principles of Bitcoin and Ethereum. It was already pointed out by critics that the supply was already being mined, Ripple controls the escrow and the structure of the UNL was considered centralization. To address these concerns, in 2017, Ripple put 55 billion XRP into escrow, creating a predictable release schedule that reduces the risk of supply manipulation.
In December 2020, the SEC’s lawsuit claiming that XRP was an unregistered security put the governance issue to the forefront in a regulatory context. The main issue of whether XRP is a security in part depended on whether buyers had the expectation to profit from Ripple’s activities, which ultimately rested on the degree of centrality Ripple had to the network’s operation and value. The ruling was in favour of Ripple in 2024 in secondary market sales, the SEC reclassifying the tokens as commodities, and the philosophical issue was never resolved. The SEC’s new guide on SEC Crypto Enforcement explains what’s changed, what hasn’t, and what investors should keep in mind before investing in any crypto project today.
By July 2025, the XRPL could process 70 million transactions, an average of 1.8 million transactions per day for July, and the total volume of real-world asset tokenizations has reached $474 million, making it clear that the network had actual utility. By February 2026, the network will have managed to close more than 70 million ledgers without any significant outages. Defenders of that network’s history before centralization critics were given their victory in these performance metrics, which are now the most effective way to demonstrate its reliability.
XRP Ledger vs Bitcoin and Ethereum: A fair comparison
Sometimes, the decentralization debate is disbalanced. The decentralization of XRPL stands to a higher standard than either Bitcoin or Ethereum.
The mining of bitcoins is highly concentrated. The mining power has always been dominated by a few mining pools, typically five to six at any given moment. The manufacturing of mining hardware is limited to a few manufacturers, hence another concentration. The development community is small, tight-knit, and a handful of people have a say in decisions about the protocol. But none of this takes away Bitcoin’s ability to be decentralized, it’s just proof that decentralization is always a matter of degree.
There are concentration problems in the proof-of-stake ecosystem of the Ethereum blockchain. Significant amounts of all Ether staked are controlled by the liquid staking protocol, Lido Finance. The top 4 staking entities account for more than 50 percent of the validation. Most Ethereum-related transactions now occur on L2, and the majority of these L2S are rollups controlled by a single entity, the sequencer, which has a large unilateral influence on the order of transactions.
Neither of these observations diminishes the centralisation concerns of XRPL. They are designed to make it clear that the question is not “Is XRPL completely decentralised?” It’s “how decentralised is XRPL in comparison to its peers, and is this level of centralisation an unacceptable risk?
XRPL outpaces all the top chains in terms of raw speed and efficiency. Bitcoin and Ethereum are not able to come close to these metrics at this stage of their development as they offer a settlement time of only 3 to 5 seconds, and have a sub-$0.0001 fee, and a capacity of only 1500 TPS. XRPL’s energy consumption is the same as that of a small email server, whereas Bitcoin’s Proof of Work is the equivalent of the electricity consumption of medium-sized countries.
The truthful comparison implies that XRPL lies at a different point on the decentralization-efficiency tradeoff curve than Bitcoin or Ethereum. By most standard measures, it is more centralized, and more efficient, faster, and more predictable. The compromise is acceptable if you are looking to build what you’re looking at.
The Institutional Paradox: Is Centralization Actually a Feature for Some?
One thing few people talk about out loud about the XRP Ledger decentralization debate is that it might actually be better for institutional investors and enterprise users to use XRPL’s governance model than the fully permissionless options.
The U.S. spot XRP ETFs have raised close to $1 billion in AUM within four weeks of their launch, making it one of the quickest launches of any crypto ETF on record. Goldman Sachs had invested almost $154MM in XRP ETF holdings. These are not actors who are indifferent to counterparty risk or governance structure. They’re making smart decisions on where to invest their institutional funds.
A network that has predictable governance, a known set of operators that can provide the validators, and a company of record that can be brought in on compliance issues is real-world benefits for institutions in regulated spaces. The XRP Ledger’s Permissioned Domains feature, which entered the network in February 2026, is part of the XLS-80 amendment that enables institutions to enforce access restrictions on specific network functions, such as KYC verification. This makes XRPL seem to be a “compliant, institutional-grade environment” for trading tokenized assets. If you’re a crypto purist, this is the problem: Public infrastructure that includes permissioned access for regulated participants is not public infrastructure at all. A restriction of access to KYC-verified counterparties isn’t a bug from the viewpoint of an asset manager who is seeking to launch a tokenised Treasury product on a public blockchain, it is a mandatory part of the regulatory compliance.
By the end of 2025, the real-world asset tokenization on XRPL had reached more than $474 million in represented value, and the total represented value on XRPL is nearing $1.5 billion. These assets being tokenized range from U.S. Treasuries and real estate instruments to commodity-backed tokens and stablecoins. In May 2026 alone, U.S. spot XRP ETFs saw a robust performance with their net inflows reaching $131 million, accounting for approximately 1.26 percent of the circulating supply. These aren’t the figures of an institutional capital that sees the governance of a network as fatally flawed.
This is not the solution to the decentralization issue. But it reframes it. The issue could be not that XRPL is not decentralized enough in principle, but that its particular governance structure is suitable for its intended use cases. XRPL’s model might be just right for cross-border payment infrastructure in the regulated financial institutions space. It’s not quite up to the standards for providing a politically sensitive financial foundation that remains uncensored and accessible to the masses, even though it’s certainly close.
Reforms and the Road Forward: What Is Actually Changing
Ripple’s 2025 decentralization roadmap is the most explicit answer to the question of centralization that has been levelled at Ripple over the years. The main pledges are to increase the UNL to more than 70 validator nodes and decommission one of Ripple’s validator nodes for each two third-party validator nodes joining the default UNL. This is a conscious shift towards community-validated over time. Another layer of governance decentralization is the XAO DAO, a governance body driven by the community of the XRPL ecosystem. The DAO also exists outside of Ripple Labs and makes decisions on some of the ecosystem funds’ allocations and community initiatives that are separate from the Ripple governance.
The XRPL document was updated in September 2025, and the default UNL configured nodes will have to migrate in order to maintain their nodes. If they don’t, the default UNL will expire in January 2026. This migration process allowed for an opportunity to update the default list of validators, and the community made a stronger impact in this process. In addition to the XRPL Foundation operating outside of Ripple Labs, there have been steps taken to have its own recommended UNL as an alternative to Ripple’s default UNL. The objective is to develop a world in which several UNL publishers exist, and the practice of a dominant influence on the recommendations from a single entity is minimized.
These are welcome changes, but is this enough, and is this soon enough? The XRPL Foundation’s UNL is still a small alternative to the dominant default of Ripple. The DAO has very limited, formal decision making power regarding the core protocol. Ripple’s validator decommissioning seems to be taking place at a steady pace, ensuring its impact in the ecosystem remains for years to come. The changes in the structure are going in the right direction, but the network is still a long way from the permissionless utopia, which Bons and others are calling for.
The SWIFT “Dead Chain Walking” Context
If you want to write about the XRP Ledger decentralization discussion in a comprehensive manner, one thread you should include is the competitive backdrop to the entire situation. In 2025, SWIFT’s Tom Zschach publicly dismissed XRPL as a “dead chain walking”, citing the network’s DeFi total value locked in just $87.85 million compared to the DeFi ecosystems of Ethereum, Solana and others, showing that the network was not attracting significant developer interest. At that time, daily DEX volume on XRPL was less than $70,000. There was very little activity in derivatives. XRPL was not a competitive DeFi environment, at least in comparison to Ethereum and Solana, as it lacked the developer interest necessary to spur innovation.
In 2025, Ripple’s CTO admitted these obstacles and provided a plan to overcome them: Automated Market Makers, the RLUSD stablecoin launch, integration of the USDC stablecoin, and an Ethereum Virtual Machine sidechain to draw out Solidity developers. RLUSD grew to $340.3 million on network in Q1 2026. The number of daily transactions had tripled from the mid-2025 mark. The EVM sidechain was being developed.
This competitive landscape is undeniably linked to the decentralization debate. A network that is facing some difficulties in recruiting DeFi developers due to its governance system is now encountering additional challenges. Each feature that adds to XRPL’s appeal to regulated institutions, such as KYC-gated Permissioned Domains, can also detract from its appeal to the permissionless DeFi developer community. This is not a contradiction, but it’s a tension that Ripple’s product roadmap and strategy will have to deal with if it’s to grow beyond its cross-border payments use case.
What Investors and Users Should Really Conclude
When all the pros and cons and all the data points have been presented, what is a reasonable judgment on the XRP Ledger for someone who is expected to make an informed decision about it?
Unlike Bitcoin, the XRP Ledger is not decentralized. That is by no means a controversial statement, because it’s just a description of its architecture. Ripple Labs has an uneven influence on the validator makeup of the default UNL, on the developer tooling ecosystem, and on the protocol roadmap. According to the Nakamoto coefficient benchmark, which is followed by Kaiko and most other institutional blockchain analysts, XRPL is one of the least competitive public blockchains. The XRP Ledger, meanwhile, is not a “central authority” like a corporate database. Rules of the protocol are implemented in the validator network, and the rules cannot be broken by Ripple alone. It’s not by chance that there have been no core network breaches over thirteen years it’s a system that in practice has held up extraordinarily well. The 80% consensus rule for protocol upgrades makes it very difficult to implement a unilateral change by any single entity, including Ripple.
In fact, one way to sum it up is that this is a “federated” area between completely permissionless public networks and completely centralized private networks. More open and resilient than a private corporate database, and more curated and governed than Bitcoin or Ethereum. The point of that middle ground is purely up to the needs of the network.
XRPL’s governance model is quite suitable for cross-border payment infrastructure for regulated financial institutions. If you need a financial application that can’t be regulated by any authority or influenced by any company, it may not be the best choice for foundations. The changes in progress, UNL expansion, Ripple validator decommissioning, the XAO DAO, and the XRPL Foundation’s alternative UNL are all heralding a more decentralized network. The main question that will determine the evolution of XRPL in the future of blockchain development is whether or not those changes will be enough, and whether they will happen quickly enough to appease the critics before the wave of institutional adoption further locks in the current governance framework or puts pressure for further structural change.
Conclusion
It is one of the most significant and ongoing debates within the cryptocurrency industry that hasn’t yet been resolved in the XRP Ledger. It is not a debating between informed and uninformed, it is a debate about people with differing values about decentralization for what it is and what it means.
Preserving the integrity of rules to the protocol by powerful actors is the primary benefit of decentralization, and the XRP Ledger has a 13-year history and mathematical consensus requirements, which offer reasonable assurance. If decentralization means that no one company or group has an unfair hold on any part of the network’s advancement, from its validator set to its developer resources to its future protocol direction, then XRPL is definitely not decentralized at the moment.
There is no doubt that the network is evolving. The number of daily transactions has more than doubled in less than a year. Capital has rushed into XRP ETFs. The tokenization of real-world assets has ballooned to almost $500 million. Diverse initiatives are being undertaken with validators. The network is not standing still, and the governance debate is not static. The challenge that will define the XRP Ledger’s role in the coming decade is whether the changes are swift enough, deep enough, and will yield a network that is truly decentralized, or merely a more complicated version of the same centralized network structure.
