RippleX’s Chief of Engineering, J. Ayo Akinyele, along with David Schwartz, the outgoing CTO of Ripple, recently ignited a conversation about possible future developments in the XRP Ledger (XRPL). The objective of the discussion is to broaden the utility of XRP across the vast landscape of decentralized finance.
RippleX, the core developer arm of Ripple, works on constructing tools and infrastructure specifically for the XRPL. Akinyele, in a recent discussion, revealed that XRP’s growing function now includes tokenized assets, real-time value transfer, settlement,DAT’s, and the recent launching of first pure spot U.S. XRP ETF by Canary. This notably underlines the escalating presence of XRP in the global institutional markets.
Akinyele’s Thoughts on XRPL
Akinyele rationalized that this rapidly expanding scope naturally stimulates questions concerning future incentive models and participation. An aspect that is particularly debated is the potential of native staking on the XRPL. Staking in other networks promotes alignment between the validators and token holders via financial rewards. These models could be a direct method for holders to engage in network governance but might also introduce new complexities concerning distribution and fairness.
However, this type of incentive could oppose the long-established design ethics of the XRPL, suggested Akinyele. The current model of XRPL involves burning fees rather than redistributing, and validator trust is established through performance, not stake. Native staking could necessitate foundations like a sustainable staking reward source and a fair mechanism of distribution. The fee-burning model prevalent now might require reconsideration, with new programmability fees possibly directed to a rewards pool, added Akinyele. While staking can enhance engagement, the challenges it could potentially introduce, such as governance and fairness, must be cautiously dealt with.
To prove that Swordfish is continuing the XRPL’s track record of innovation, developers are already digging deep into staking analogous models without making protocol-level alterations at ecosystem testing. The Proof of Association model currently in application has remained stable for over a decade, with its focus on trust and reliability over financial incentives.
David Schwartz weighs in
David Schwartz, who recently announced his planned departure from the role of CTO at Ripple by the end of this year, also took part in the conversation. He remarked that his ‘thoughts on governance and consensus models have evolved’, which makes it the right time to have an open discussion about potential new designs.
Schwartz feels that it’s an apt time to delve into what native DeFi capabilities could potentially look like on XRPL, especially because of ongoing contract initiatives. He stresses that the XRPL network’s original model was built in 2012, before the current DeFi landscape had been established.
Schwartz highlighted two technically intriguing but probably impractical ideas in the short term that are currently circulating within the community.
Two-layer Consensus Model
The first proposal introduces a two-layer consensus model where an inner set of validators, chosen based on stakes, advances the ledger, while the current outer layer oversees changes, fees, and arrangements. This structure, according to Schwartz, could increase diversity amongst validators without affecting throughput. It may allow for faster, lighter consensus rounds, and ensure that the network only stops if both levels fail.
Funding Smart Contract Verifications
The second idea Schwartz discussed was to retain the current consensus mechanism of XRPL while using transaction fees to fund zero-knowledge proofs that verify smart contract implementation. This would enable nodes to skip executing contracts directly while still ensuring their correctness.
Despite these ideas being technically appealing, Schwartz pointed out that they may not be realistically likely to be good – at least not in the near future.
During this discussion, community members voiced their concerns about alignment of incentives, dynamics of fees, and competition among validators. In response to such concerns, Schwartz mentioned that in the two-layer model, outer validators could still oversee inner validators without any staking. Nevertheless, he raised the question about whether the potential performance gains could justify the added complexities and the risks involved.
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In conclusion, although Schwartz and Akinyele do not necessarily advocate for immediate changes, they believe that these initial discussions are essential. They help us to understand how emerging incentive models, programmability features, and governance structures could influence the long-term trajectory of the network.
With the growth in the ecosystem, examining changes like staking could clarify what aspects of XRPL should be preserved and where new capabilities might fit in. Both of them welcome the input of the community in these crucial matters.
