Article source: Foresight News
Author: Justin Bons, Founder of Cyber Capital
Compiler: Luffy, Foresight News
Ripple (XRP) is a centralized and permissioned network, contrary to what its executives claim. XRP misleads investors by falsifying its decentralized nature; in reality, the network is completely controlled by the foundation.
The XRP consensus is based on UNLs (Unique Node Lists), where trusted nodes are determined by centralized entities (including the foundation). XRP consensus is not based on PoS or PoW, but rather 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 who would call this design 'decentralized'; however, they are deceiving the public.
However, users can modify their own UNL and choose whom to trust. The language used 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 forking.
This means that in practice, direct permission from the XRP Foundation is required to participate in consensus, which is almost a form of centralization in blockchain design... Now let's delve 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 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 have now appeared 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:
Blockchain allows parties that 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 claim of XRP is based on the idea that different parties can spontaneously organize around a new UNL list without the incentive mechanisms mentioned earlier. Clearly, this is nonsense, as this is precisely the problem that blockchain aims to solve; a new UNL cannot achieve coordination.
If the new UNL cannot coordinate, it means that the foundation has de facto complete control, and control over validators equates to 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 be anonymous, as it is secured by cryptoeconomic game theory rather than trust, which 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 verification mechanism, and trust is the foundation of this system, thus: 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:
After careful examination, I found that all UNLs are actually identical, using the same set of validators, further proving that the foundation completely controls the XRP network!
This screenshot is from two years ago, 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 the de facto list since all UNLs must comply, or there is a risk of 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 carries 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 researching XRP from the early days, and I vividly remember people recognizing the trade-offs of decentralization. As the advocacy from the community and leadership 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 since no new XRP was created, and all newly 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, transforming XRP into a more traditionally decentralized blockchain.
They can also candidly admit that facts are facts, and I will not contest that. However, using lies to lure ignorant retail investors is wrong; 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 deep the rebuttals are, they do not change some simple facts: XRP is now completely permissioned and centralized.
If you really care about XRP, take it seriously. Because within this critical post, there are solutions that can help XRP succeed: honestly admit its centralization, or turn towards decentralization. The truth will set us free; leaving XRP or applying pressure for change, nothing is irreversible.
