Original source: Justin Bons X account
By: Justin Bons, Founder of Cyber Capital
Compiled by: Luffy, Foresight News
Ripple (XRP) is a centralized and permissioned network, contrary to claims by its executives. XRP misleads investors by misrepresenting its decentralized nature, when in reality the network is completely controlled by the foundation.
XRP consensus is based on UNL (Unique Node List) where trusted nodes are decided by centralized entities (including the Foundation). XRP consensus is not based on PoS or PoW but on PoA (Proof of Authority), but they claim to be more decentralized than Bitcoin and Ethereum…
All of this is theoretically supported by Ripple's own documentation. It is hard to find any researchers outside of XRP calling this design 'decentralized'; however, they are deceiving the public.
However, users can modify their own UNL and choose whom to trust. The language here is subtle. A truly decentralized cryptocurrency is 'trustless' because it doesn't require any 'trust'; choosing whom to trust is completely different from being trustless!
XRP is not trustless at all; worse yet, if your UNL overlaps insufficiently with the rest of the network, you will face risks. According to Ripple's documentation: 90% UNL overlap is required to prevent forks.
This means that in practice, direct permission from the XRP Foundation is needed to participate in consensus, which is almost centralized in terms of blockchain design... now let's delve deeper into these UNLs.
We have established that UNLs are trusted third parties ultimately chosen by the XRP Foundation, and as we delve deeper into these UNLs, this is further confirmed: for a long time, there was only one UNL, namely the dUNL managed by the XRP Foundation.
However, this list is not static but dynamic. The XRP Foundation can change the validator list in a completely centralized manner without any notice, kicking out anyone who violates authority.
Over time, there are now two UNLs, namely dUNL and XRPLF, both of which are directly funded by the XRP Foundation. This adds another layer of de facto control over the network; let me explain:
Blockchains allow participants who do not trust each other to coordinate, all thanks to the underlying incentive mechanisms (PoS or PoW). However, XRP lacks block rewards and incentives; it is purely based on trust. So how can different UNLs coordinate with each other?
XRP's claim is based on the notion that different parties can spontaneously organize around a new UNL list without the incentive mechanisms mentioned earlier. Clearly, this is nonsense, as this is exactly the problem that blockchains are meant to solve; the new UNLs cannot achieve coordination.
If the new UNLs cannot coordinate, it means the Foundation possesses de facto complete control, and control over validators equals control over the network, resembling a consortium chain.
In all other blockchains, you cannot choose validators because they are trustless and permissionless, which is why validators can be anonymous, as it is secured by cryptoeconomic game theory rather than trust. This is where XRP fundamentally differs.
XRP is not a cryptocurrency at all. Since it is neither PoS nor PoW, it is a PoA; otherwise, what else could it be? Consensus algorithms require a validation mechanism, and trust is the foundation of this system; therefore: XRP is a PoA!
PoA systems always have a central authority to appoint validators. So how does the fact that there are currently two 'official' UNL lists contradict my assertion that different UNLs cannot coordinate? This is where things start to get really crazy:
Upon careful inspection, I found that all UNLs are actually identical, using the same set of validators, further proving that the Foundation effectively controls the XRP network!
This screenshot is from 2 years ago, but I confirm that the situation is still the same now, proving that the new UNLs cannot coordinate with each other. As a result, the Foundation's list becomes a de facto list, because all UNLs must comply, or risk being forked.
This also allows the Foundation to conduct censorship when forced, as they have such a high degree of control. This is fundamentally different from how cryptocurrencies operate and explains why only 20% of validators are needed to stop the network...
Running a trusted validator also has no rewards. Unlike PoW or PoS, where the cost of attacks reflects the block rewards for miners/stakers. This is why decentralization metrics are highly correlated with block rewards. On XRP, this decentralization metric is zero.
I have been studying XRP since the early days, and I clearly remember people acknowledging the trade-offs of decentralization. As the community and leadership's claims became more extreme, this situation gradually changed. I say this not to belittle investors but to empower them.
Help break the XRP echo chamber and stop being the exit liquidity for others. XRP's pre-mining rate is as high as 99.8%, making it one of the most unfair distributions in history, as no new XRP was created; all new circulating XRP was purchased from the founders.
I have always been interested in the early discussions about Ripple's decentralization; pretending that XRP is permissionless is not the correct answer. The real solution lies in replacing the UNL list with PoS to transform XRP into a more traditionally decentralized blockchain.
They can also candidly admit that facts are facts, and I wouldn't contest that. However, using lies to attract ignorant retail investors is wrong, and this is where we as an industry need to draw the line and self-regulate!
XRP may currently bribe or deceive the SEC, but they cannot deceive us crypto natives. No matter how complex and in-depth the rebuttal is, it does not change some simple facts: XRP is now fully permissioned and centralized.
If you really care about XRP, take it seriously. Because in this critical post, there are proposals that can help XRP succeed: admit its centralization or turn towards decentralization. The truth sets us free; leaving XRP or applying pressure for change, nothing is irreversible.
