1. General Presentation
Name: XRP (XRP)
Market Capitalization: $119.7B
Ranking on CoinMarketCap: 4th
2. Technology and Infrastructure
– XRP is a Layer 1 cryptocurrency (decentralised public blockchain) operating on XRP Ledger
– It is a native token
– According to the XRP Ledger Consensus Protocol, XRP uses a unique consensus protocol (not Proof of Work or Proof of Stake) where independent validators reach agreement on transactions through rounds of voting. Validators rely on a trusted set of peers (Unique Node List), and once 80% agree, the ledger is updated.
3. Use Case and Functionality
– XRP is primarily designed to facilitate fast, low-cost international money transfers (through Ripple) and currency exchanges. It serves as a bridge currency to smooth out price fluctuations across borders, enabling businesses in different countries to transact and minimize transaction costs.
– Its main competitors are other cryptocurrencies focused on cross border payments, such as HeLa, Stellar, Swift GPI
4. Strengths and Weaknesses
Advantages
– Speed: Transactions on the XRP Ledger settle in approximately 3 to 5 seconds.
– Low fees: minimal often less than a cent
– Scalability: the network can handle up to 1500 transactions /second
– Eco friendly? unlike PoW-based systems, the XRP Ledger is less energy-intensive energy efficient as it need less computing power to reach consensus
Weaknesses
– Centralisation concerns: 60% of XRP being held by Ripple
– Regulatory issues: XRP has faced legal scrutiny, notably from the U.S. Securities and Exchange Commission (SEC)
Blockchain trilemma
– Scalability: extremely scalable: 1500 transactions/second
– Security: very secure as it requires a supermajority of validators (more 80%) to agree on transaction set
– Decentralization: higher centralization (roughly 60% detained by Ripple)
5. Adoption and Ecosystem
– Main users: Individuals users wanting efficient cross-border transactions, banks
– Partnerships: Ripple is the company associated with XRP, has formed partnerships with various financial institutions and payment providers to enhance cross-border payment solutions.
– The XRP Ledger has an active developer community contributing to its open-source codebase, developing applications, and expanding its use cases.
6. Tokenomics and Supply
– Maximum supplu of XRP: 100 billion tokens
– Distribution: The 100 billion XRP were pre-mined at inception. A significant portion was allocated to Ripple Labs, with the remainder distributed to individuals and entities. Ripple Labs periodically releases XRP into circulation through sales and distributions.
– It has a burning mechanism implemented by Ripple, through transaction fees, meaning that every time an XRP transaction is processed, a small amount of XRP is burned
7. Risks and Future Outlook
Risks
– Regulation: legal actions, such as the one from the SEC prose a significant risk to XRP’s adoption
– Other emerging cryptocurrencies
Upcoming developments in roadmap
– Addition decentralized identity (DID): credential-based verification, allowing for permissioned exchanges and decentralized markets that meet regulatory standards
– Tokenization: enable tokenized real-world assets (RWAs) to be traded on the blockchain
– Development of a permissioned decentralized exchange (DEX): where tokenized RWAs can be traded + add smart contract-like capabilities to the XRPL so as to permit institutional use