Original title: Everything You Don't Want to Know about XRP Ledger: Wallets, Memecoins and More.
Original author: Ignas | DeFi Research
Original source: https://www.ignasdefi.com/
Compiled by: Daisy, Mars Finance
I can hardly believe I'm writing this blog.
A year ago, I wrote that the bull market would be crazier than you expect. And seeing XRP rise 3.5 times in a month, surpassing Solana, feels like reaching the peak of madness.
You might hate XRP and want to ignore it. I ignored it myself for years—since joining crypto in 2018. But the thing is: the market isn't wrong; we are.
If meme coins become too big to ignore, maybe XRP is the next playground for 'degens' seeking generational wealth. Or maybe not.
In any case, out of curiosity, I decided to learn more.
This blog will analyze how the XRP Ledger (XRPL) operates, how to purchase tokens on it, the core concepts you need to understand, and resources for further exploration.
Once you've read this, you should at least understand XRP enough to decide whether it's worth engaging with—or avoiding.
What is XRPL?
XRPL claims to be a blockchain built for speed and efficiency.
But it's actually not particularly fast, decentralized, or efficient (as you can see, efficiency is a contentious point).
XRPL does not use PoW or PoS consensus mechanisms. It employs a federated consensus mechanism where validators reach consensus on transactions without needing mining or staking.
Here's how it works:
Over 109 validators handle transactions, with 31 trusted validators making up the unique node list (UNL) to reach consensus.
Source: xrpscan
In practice, around 31 trusted UNLs run the XRP ledger. These include Arrington XRP Capital, Bifrost wallet, Ripple itself, XRPscan, etc. You can find a real-time list of UNLs here or on XRPscan (which is more user-friendly).
They claim that any entity can run and publish UNL, and these UNLs are chosen based on reliability. But relying on UNLs also brings centralization risks, as Ripple and the XRP Ledger Foundation have significant influence over the default UNL. There's talk that Ripple Labs needs to approve these UNLs.
'Federated consensus' is a fitting name.
You might expect XRP to be fast because it relies on only a few validators.
But that's not the case. Transaction confirmations take 3 to 5 seconds. And Solana leads by a wide margin in node count, transaction speed, and the smart contract capabilities you'll see.
The good thing is that transaction fees are nearly zero, with each transaction costing only 0.00001 XRP.
What are trustlines, reserves, negative balances, and Rippling?
When you create an XRPL wallet (for trading XRP meme coins), you'll notice some unusual aspects.
First, you need at least 10 XRP to activate an account. Additionally, XRPL requires that each token you hold in your wallet has a reserve of 2 XRP (so if you hold 20 meme coins, you need to 'reserve' 40 XRP).
A governance vote is currently underway to reduce these requirements by tenfold. You can find the current requirements under the 'Base Reserve' and 'Owner Reserve' tabs on XRP Scan.
This is because balances work differently through 'trustlines' with a different mechanism. This is the most complex part, so please give me a moment to explain.
'Trustlines are the structure used in the XRP ledger to hold fungible tokens. Trustlines enforce the rules of the XRP ledger, meaning you cannot force someone to hold tokens they do not want. This precaution is necessary for enabling applications of the XRP ledger in community credit and other areas.' — from Ripple's documentation
Essentially, through trustlines, no one is forced to hold tokens they do not trust, avoiding spam and allowing controls like freezing, authorization, and 'no Ripple flag' to prevent unnecessary balance adjustments.
Trustlines on XRPL are the foundation of its token system.
They connect two accounts and define the balance between them, thus enabling the issuance and transfer of tokens.
When an issuer creates a token, their balance may become negative, indicating the amount they have issued, while the holder's balance becomes positive.
For example, if the issuer sends 100 tokens, their trustline balance is -100, and the recipient's balance is +100.
Rippling (the origin of Ripple's name) takes this process further by allowing token balances to flow between connected accounts during payment. It’s like a passive exchange system that allows funds to settle atomically without the issuer's involvement.
For example, if Alice owes Bob $10, and Bob owes Charlie $10, Rippling allows Alice to pay Charlie directly, adjusting the balance through the trustline.
Remember why Ripple designed it this way!
It's like a 'double-entry bookkeeping system' for 'efficient' net settlement, aimed at serving real-world assets, stablecoins, tokenized goods, and cross-border payments.
This means that issuers have more control over the use of the assets.
To comply (think stablecoins), authorized trustline issuers can enable the 'Require Auth' flag, restricting token ownership to only approved accounts. This feature makes XRPL suitable for KYC/AML (anti-money laundering) regulatory assets.
Decentralization geeks may be quick to criticize this.
If you understand how it works, you might not want to enable Rippling since your balance could be adjusted. Users can enable or disable the Rippling feature.
Enable Rippling:
If you want to allow balances to flow through your account as part of a payment path.
This is usually used by accounts acting as intermediaries, like market makers or exchanges (not sure if they'll earn fees, I guess they won't?).
Disable Rippling:
If you want to prevent your balance from being used for payment paths.
Typically used by regular users to protect their balances from accidental adjustments.
As mentioned, each trustline (for example, the trustline opened between your wallet and a meme coin issuer) requires locking 2 XRP as a reserve in your wallet.
If you're confused, you can check Ripple's explanation.
EVM Sidechain: Running Ethereum on XRPL
XRPL does not have a complete virtual machine like Ethereum's EVM, Solana's SVM, or Aptos's Move VM. Instead, it uses WebAssembly-based Hooks, which are lightweight programs for basic transaction logic.
Hooks are not as powerful as smart contracts. They are better suited for simple automation tasks, such as rejecting transactions when the balance is too low.
Nonetheless, XRPL does have a native AMM (automated market maker) that allows liquidity provision and cross-token trading. We'll go into detail on how this works later.
Thus, while XRPL supports basic programmability, it cannot compete with Ethereum in the complex realms of DeFi or dApps—at least not in native implementations.
For this reason, Ripple is developing an EVM sidechain, currently in testing, expected to go live in a few months. XRP will serve as the fuel token.
Alpha: EVM><XRPL bridge powered by Axelar, so if it succeeds, Axelar could become a big winner here.
In short, XRP is becoming modular! It will be interesting to see if sidechains can gain enough traction.
Alright, the boring part is over, you've made it through. Next comes the exciting part.
How to buy meme coins on XRP
A shocking fact is that the Ripple Ledger has a native AMM (automated market maker), similar to an 'embedded AMM', where you can trade... primarily meme coins.
Although its TVL (total value locked) is still low, trading volume has been rising due to the meme coin craze. About 14 million XRP has been deposited into AMM pools, so we are indeed in the early stages (or rather late, as XRP's market cap has surpassed Solana).
You can view the amount of XRP locked in each pool on XRP Scan.
Note that XRP Scan provides readable data about transactions, analytics, validators, etc. You can track whale wallets, token concentration data, making data-driven meme coin trading possible.
The simplest way to start trading meme coins:
1. Visit the First Ledger website. It allows you to create a wallet on Telegram or in the browser and keeps your keys stored locally. Also, try using the Xaman wallet on your phone. It runs well, and you can import your keys into both wallets to see which you prefer.
2. Purchase XRP from a CEX (centralized exchange), or many recommend using Simpleswap to bridge different assets to XRP. I haven't tried it, but if you want to use it, I can share my referral link.
You can sort meme coins on Firstledger's token page. You'll see new tokens being created every minute.
Caution! The supply of most meme coins is highly concentrated. You'll see 10 wallets holding over 40% of the total supply. To make token issuance fairer, projects like Pump dot fun are indeed needed on XRPL.
Tip: Sort tokens by 24-hour trading volume, market cap, number of holders, or creation date. My intuition is that the earliest created, highest trading volume, and most held tokens will perform better than recently created ones. However, the strategy is up to you.
A more advanced platform is xMagnetic.
You can discover tokens, provide liquidity, and view statistics. I recommend using the Xaman wallet in conjunction with xMagnetic. Sologenic DEX is another option, but it didn't work well for me.
Now you're ready to explore Ripple's 'degen' space. The question is: are you willing to do so?
