Original source: Justin Bons' X account
Author: Justin Bons, Founder of Cyber Capital
Compiled by: Luffy, Foresight News
Ripple (XRP) is a centralized and permissioned network, contrary to what its executives claim. XRP misleads investors by falsely reporting its decentralized nature; in reality, the network is completely controlled by the foundation.
XRP consensus is based on UNL (Unique Node List), where trusted nodes are determined by centralized entities (including the foundation). XRP consensus is not based on PoS or PoW but on PoA (Proof of Authority), yet 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. Truly decentralized cryptocurrencies are 'trustless' because no 'trust' is needed; choosing whom to trust is entirely 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 be at risk. According to Ripple's documentation: a 90% overlap of UNLs is required to prevent a fork.
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… Let's dive deeper into these UNLs.
We have established that UNLs are the trusted third parties ultimately chosen by the XRP Foundation. As we delve deeper into these UNLs, this point is further confirmed: for a long time, there has only been one UNL, namely the dUNL managed by the XRP Foundation.
However, this list is not static; it is dynamic. The XRP Foundation can change the validator list in a completely centralized manner without any notice, kicking out anyone who violates the authority.
Over time, there are now two UNLs, namely dUNL and XRPLF, both directly funded by the XRP Foundation. This adds another layer of de facto control over the network; let me explain:
Blockchains allow coordination among parties that do not trust each other, thanks to the underlying incentive mechanisms (PoS or PoW). However, XRP has no block rewards or incentives; it is purely trust-based, so how do different UNLs coordinate with each other?
The claims of XRP are based on the notion that different parties can spontaneously organize around the new UNL list without the incentive mechanisms mentioned earlier. Clearly, this is preposterous, as this is precisely the problem that blockchain aims to solve; the new UNLs cannot achieve coordination.
If the new UNL cannot coordinate, it means the foundation has de facto complete control, and control over validators equals control over the network, which resembles a consortium chain.
In all other blockchains, you cannot choose validators because they are trustless and permissionless, which is why validators can remain anonymous, as it is secured by cryptoeconomic game theory rather than trust; this is the fundamental difference of XRP.
XRP is not a cryptocurrency at all. Since it is neither PoS nor PoW, it is a PoA; what else could it be? Consensus algorithms need 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, what about the fact that there are currently two 'official' UNL lists? This contradicts 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 completely!
This screenshot is two years old, but I confirm that the situation remains the same now, proving that the new UNLs cannot coordinate with each other. Thus, the foundation's list becomes a de facto list, as all UNLs must comply, or else they 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…
There are also no rewards for running trusted validators. Unlike PoW or PoS, where the cost of an attack reflects 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 researching XRP from early on, and I clearly remember people recognizing the trade-offs of decentralization. As the community and leadership's assertions 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 someone else's exit liquidity. 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 newly circulating XRP was purchased from the founders.
I have always been interested in early discussions about Ripple's decentralization; pretending XRP is permissionless is not the right answer. The real solution lies in replacing the UNL list with PoS, transforming XRP into a more traditional decentralized blockchain.
They can also honestly admit that facts are facts, and I will not dispute that. However, it is wrong to lure ignorant retail investors with lies; 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, the cryptocurrency natives. No matter how complex and deep the rebuttals are, this will not change some simple facts: XRP is now fully permissioned and centralized.
If you truly care about XRP, take it seriously. For within this critical post, there are solutions that can help XRP succeed: be honest about its centralization or shift towards decentralization. The truth sets us free; leaving XRP or applying pressure for change is not irreversible.
