xrplswap #1 — XRPL, XRP’s Blockchain
※ xrplswap is the first AMM DEX on XRP Ledger. The xrplswap series #1–4 are official community documents from the xrplswap team to introduce xrplswap to XRP holders.
[xrplswap series]
▶ XRPL, XRP’s Blockchain
2. XRPL’s DEX
3. Advanced Decentralized Token Exchange Mechanism, AMM
4. Introducing xrplswap, XRPL’s first AMM DEX
XRPL, XRP’s Blockchain
[Table of Contents]
1. XRP: The 5th Largest Cryptocurrency by Market Capitalization
2. XRPL: Exploring XRP’s Blockchain
3. New challenges for XRPL, expanding the ecosystem
XRP: The 5th Largest Cryptocurrency by Market Capitalization
XRP is the 5th largest cryptocurrency by market capitalization (as of September 2023). Excluding USDT, a stablecoin, it is the largest after Bitcoin, Ethereum, and BNB(Binance Coin). If we consider South Korea alone, the scale of XRP is even greater. As of July 2023, XRP was the #1 cryptocurrency by combined trading volume on four major Korean exchanges (Upbit, Bithumb, Coinone, and Korbit), which is equivalent to XRP trading volume on Binance, the world’s largest exchange used by people all around the world.
However, it’s unusual. Unlike other blockchains, XRP’s blockchain doesn’t have any significant DApps (Decentralized Applications), and its consensus algorithm is also unique. Some even go as far as to say that because of this, it’s not a blockchain. What are XRP holders focusing on in terms of the value of XRP?
To gain a better understanding of this situation, let’s recall the original purpose of XRP. XRP was created to tackle the high fees and inefficiencies associated with the SWIFT (Society for Worldwide Interbank Financial Telecommunications) system for processing foreign currency transfers. For instance, consider a European retailer selling goods to the United States who wishes to receive euros instead of U.S. dollars. In the traditional financial system, this would involve a slow and costly transaction through the SWIFT system. XRP serves as a bridge for cross-border foreign currency transfers like this, facilitating fast and cost-effective payments. This was the primary goal behind XRP’s creation, and it has been performing admirably in achieving it.
XRPL: Exploring XRP’s Blockchain
The blockchain that utilizes XRP as its native asset is known as the XRP Ledger or XRPL for short. XRP’s primary purpose is to streamline cross-border transactions, and its role is quite straightforward. Similarly, XRPL is designed to be streamlined and optimized for XRP’s specific use case. It does not support smart contracts, and transactions must adhere to a specific format.
The simplicity of XRPL’s design has been praised for being more secure than blockchains that support smart contracts, such as Ethereum. However, it has also been criticized for being unable to support a wide range of functions like smart contracts because it can only securely execute limited functions. This is also the reason why there are few DApps on XRPL.
It’s important to emphasize that XRPL is distinct from Ripple, the company responsible for creating XRP, and Ripple’s remittance system, known as RippleNet. Ripple previously promoted its international remittance system as its primary offering, comprising xCurrent for accelerating cross-border fiat currency transfers, xRapid for expediting cross-border transactions via XRP’s On-Demand Liquidity (ODL), and xVia, an API simplifying access to the remittance system. These services have now been consolidated and rebranded as RippleNet. While distinguishing terms like RippleNet and XRPL may not always be straightforward, it’s crucial to understand that they are separate entities. XRPL serves as the distributed ledger where all transactions are recorded, not exclusively for RippleNet but for any service utilizing XRP.
While XRPL has faced criticism in the past for centralization concerns due to its association with Ripple, this is no longer the case. In its early stages, Ripple operated a significant portion of the nodes on XRPL. However, as XRP’s transaction volume has expanded, over 100 trusted nodes have taken on these roles, and Ripple has progressively decreased its node operations, with less than 5.8% of nodes remaining under its operation as of October 2022. This shift demonstrates XRPL’s commitment to distancing itself from Ripple and achieving a higher degree of decentralization.
New challenges for XRPL, expanding the ecosystem
Despite its limited functionality, many people resonate with the value of XRP, and its circulation has greatly increased. Therefore, the XRPL team is now considering expanding the ecosystem. XRP holds power because it has a large number of holders, and XRPL already takes the form of a decentralized blockchain, albeit with some critics. XRPL aims to leverage this strength. By extending the functionality of XRPL, the goal is to foster a more vibrant ecosystem and increase the value of XRP.
While adding new features, XRPL is still taking a conservative approach to security and maintaining a high level of security. Like other blockchains, allowing anyone to create plausible functions with smart contracts would allow for more autonomy but less security. So, XRPL takes a more secure approach by adding separate transaction types for each function to support a wide range of features.
New transaction types, including order-book-based DEX (Decentralized Exchange), and payment channels, have been introduced and are in active use. Additionally, AMM (Automated Market Maker) is set to become a new transaction type, proposed via XLS-30d. It has recently undergone a successful security audit by CertiK and is currently in the final testing phase on the DevNet before its mainnet launch. Moreover, XRPL has plans for secure smart contracts and NFTs, which are actively under development.
In line with the release of various functionalities, various DApps are also gearing up for launch. The changes in XRPL are currently at the center of attention for XRP holders.
Outro
So far, we’ve explored what XRP’s blockchain, XRPL, is and its potential. The purpose of this Medium series is to introduce xrplswap, the first AMM DEX on XRPL’s DApp. We’ll continue the journey in the next article.
References
