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 the claims of its executives. XRP misleads investors by falsely reporting its decentralized nature, while in reality, the network is entirely 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 that call this design 'decentralized', yet 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 does not require any 'trust'; choosing whom to trust is fundamentally different from being trustless!
XRP is not trustless at all; worse still: 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 required to participate in consensus, which is almost centralized in terms of blockchain design... 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 point 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; it is dynamic. The XRP Foundation can change the validator list in a fully centralized manner without any notice, kicking out anyone who violates the authority.
Over time, two UNLs have emerged, 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:
Blockchain allows disparate parties to coordinate without distrust, thanks to underlying incentive mechanisms (PoS or PoW). However, XRP has no block rewards or incentives; it is purely based on trust. So how do different UNLs coordinate with each other?
XRP's claims are based on the notion that different parties can spontaneously organize around a new UNL list without the previously mentioned incentive mechanisms. Clearly, this is nonsense, as this is precisely the problem blockchains aim to solve; new UNLs cannot achieve coordination.
If the new UNLs cannot coordinate, it means that the Foundation has de facto complete control, and the 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 with 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 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, 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 truly crazy:
Upon careful examination, I found that all UNLs are actually identical, using the same set of validators, further proving that the Foundation actually has complete control over the XRP network!
This screenshot is from two years ago, but I confirm that the situation is still the same; this proves 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 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 trusted validators 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 started researching XRP early on, and I clearly remember when people recognized the trade-offs of decentralization. As community and leadership advocates became more extreme, this situation gradually changed; I'm not saying this 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 is created; all newly circulated XRP is purchased from the founders.
I have always been interested in the early discussions about Ripple's decentralization; pretending XRP is permissionless is not the correct answer. The real solution lies in replacing the UNL list with PoS, transforming XRP into a more traditional decentralized blockchain.
They could also honestly admit that facts are facts, and I would not argue against that. However, it is wrong to entice ignorant retail investors with lies, 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, the crypto natives. No matter how complex and deep the counterarguments are, this will not change some simple facts: XRP is now completely permissioned and centralized.
If you truly care about XRP, take it seriously. Because there are solutions within this critical post that could help XRP succeed: be honest about its centralization, or shift towards decentralization. Truth sets us free, whether to leave XRP or to apply pressure for change, nothing is irreparable.
