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; 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, and it's hard to find any researchers outside of XRP who would call this design 'decentralized.' Yet, they are deceiving the public.
However, users can modify their own UNLs and choose whom to trust. The language here is subtle. A truly decentralized cryptocurrency is 'trustless' because no 'trust' is required; choosing whom to trust is entirely different from being trustless!
XRP is not trustless at all. Worse, 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 nearly centralized in terms of blockchain design... Now, let's delve deeper into these UNLs.
We have established that UNL is ultimately the trusted third party selected by the XRP foundation. As we delve deeper into these UNLs, this is further confirmed: for a long time, there has only been one UNL, which is 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 various parties 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?
The claims of XRP are 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 because this is precisely the problem blockchain aims to solve; new UNLs cannot achieve coordination.
If the new UNLs 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. This 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? The consensus algorithm requires a validation mechanism, and trust is the foundation of this system, so: XRP is a PoA!
The PoA system always has 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:
After 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 2 years ago, but I can confirm that the situation remains the same, proving that new UNLs cannot coordinate with each other. Thus, the foundation's list becomes the de facto list, as all UNLs must comply, or risk being forked.
This also allows the foundation to conduct censorship under pressure, 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 comes with 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. In XRP, this decentralization metric is zero.
I started researching XRP early on, and I clearly remember people recognizing the trade-offs of decentralization. As the community and leadership's assertions became more extreme, this 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. The pre-mining rate of XRP 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 were purchased from the founders.
I have always been interested in the early discussions about the decentralization of Ripple. Pretending that 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 openly acknowledge that the facts are what they are, and I will not dispute that. However, using lies to lure ignorant retail investors is wrong, and this is where we as an industry need to draw a line and self-regulate!
XRP may currently bribe or deceive the SEC, but they cannot fool us cryptocurrency natives. No matter how complex and deep the rebuttals 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 in this critical post that can help XRP succeed: be honest about its centralization or pivot towards decentralization. The truth sets us free; leaving XRP or applying pressure for change, nothing is irreversible.
