{"id":24071,"date":"2024-12-03T12:12:34","date_gmt":"2024-12-03T12:12:34","guid":{"rendered":"https:\/\/www.bitrabo.com\/discover\/?p=24071"},"modified":"2024-12-03T12:12:34","modified_gmt":"2024-12-03T12:12:34","slug":"xrps-decentralization-insights-from-europes-pioneer-crypto-fund-founder","status":"publish","type":"post","link":"https:\/\/www.bitrabo.com\/discover\/xrps-decentralization-insights-from-europes-pioneer-crypto-fund-founder\/","title":{"rendered":"“XRP’s Decentralization: Insights from Europe’s Pioneer Crypto Fund Founder”"},"content":{"rendered":"\n

In a recent post<\/a> on X, Justin Bons, the Founder and Chief Investment Officer of Cyber Capital, Europe\u2019s oldest cryptocurrency fund, claims that the XRP Ledger (XRPL) operates in a centralized and permissioned manner, contradicting assertions made by Ripple executives. He also criticizes the XRP Foundation for allegedly misrepresenting the network\u2019s level of decentralization and maintaining strict control over it.<\/p>\n

The Centralization Argument for XRP<\/h2>\n

Bons emphasizes, \u201cRipple is centralized and permissioned, which goes against what its executives assert. The XRP community is being misled about its decentralization, and the foundation exercises complete control over the network. Promoting it as decentralized is tantamount to fraud!\u201d<\/p>\n

At the heart of Bons\u2019s argument is the claim that the consensus mechanism depends on Unique Node Lists (UNLs), which are centralized lists of trusted nodes managed by specific entities, including the XRP Foundation. He argues that this is akin to a Proof of Authority (PoA) system, contrasting with decentralized methods like Proof of Stake (PoS) or Proof of Work (PoW). \u201cThe consensus for XRP is based on UNLs [\u2026] It follows a PoA structure instead of PoS or PoW, yet they claim it\u2019s more decentralized than BTC and ETH,\u201d he explains.<\/p>\n

While Bons acknowledges that users can change their own UNLs and select trusted nodes, he argues that this does not create a truly trustless environment\u2014a key trait of genuine decentralized cryptocurrencies. \u201cThe distinction here is subtle yet crucial. Truly decentralized systems are \u2018trustless\u2019, meaning no trust is required. Choosing whom to trust differs from being trustless!\u201d he asserts.<\/p>\n

Furthermore, Bons notes that if a user\u2019s UNL does not overlap sufficiently (90% is needed) with the broader network, they risk being disconnected. \u201cIf your UNL doesn\u2019t significantly overlap with the network, you risk exclusion! Their documentation states a 90% overlap is needed to avoid forking; resistance is futile!\u201d he adds.<\/p>\n

He argues that, in practice, the XRP Foundation must grant permission for participation in consensus. \u201cIn essence, you need direct approval from the XRP Foundation to take part in consensus-making\u2014this indicates a high level of centralization in blockchain design,\u201d Bons states.<\/p>\n

Going further, he notes that for an extended period, there was only one default UNL, designated as the dUNL, which is hosted by the XRP Foundation and hardcoded as the default. \u201cWe\u2019ve established that UNLs are essentially trusted intermediaries selected by the XRP Foundation. Historically, there was merely one UNL\u2014the dUNL\u2014which the foundation hosted and hardcoded as default,\u201d he clarifies.<\/p>\n

Bons criticizes the ability of the foundation to modify these validator lists at any time, facilitated by a web address they control. \u201cThey can instantly alter the validator list without warning in a completely centralized manner, excluding anyone that opposes them,\u201d he contends.<\/p>\n

Over time, two additional \u201cofficial\u201d UNL lists emerged, though one, Coil, is no longer operational, leaving only the dUNL and the XRPLF lists, both financed by the XRP Foundation. \u201cThis further consolidates control over the network,\u201d he points out.<\/p>\n

Bons argues that the absence of incentives, similar to block rewards in PoW or PoS systems, hampers the coordination of disparate parties without trust. \u201cBlockchains enable untrusting parties to work together, thanks to the incentive mechanism (PoS or PoW) in place\u2014however, XRP lacks block rewards and operates solely on trust,\u201d he elaborates.<\/p>\n

According to Bons, the inability for new UNLs to coordinate reinforces the foundation\u2019s complete control. \u201cIf new UNLs can\u2019t cooperate, it means the foundation effectively wields total control. This is a hallmark of a permissioned blockchain federation; granting universities and companies the ability to operate nodes exemplifies this!\u201d he asserts.<\/p>\n

Upon further inspection, Bons found that all UNLs are nearly identical, sharing the same validator sets. \u201cA closer look reveals that all UNLs share identical validator sets, further demonstrating that the foundation effectively governs the network!\u201d he states.<\/p>\n

\u201cThis shows that new UNLs cannot collaborate, forcing the foundation\u2019s list to become the de facto standard. All UNLs must adhere to it or face the risk of being forked off!\u201d he adds.<\/p>\n

Bons expresses concern about the implications of this level of control and its potential for censorship. \u201cThis level of control enables the foundation to implement censorship if pressured. Such a concentration of power is fundamentally different from how cryptocurrencies are intended to function. It explains why only 20% of validators can halt the network,\u201d he warns.<\/p>\n

Moreover, he emphasizes that running a trusted validator does not yield rewards, unlike PoW or PoS models where validators earn incentives. \u201cThere are no rewards associated with being a trusted validator. Unlike PoW or PoS systems, where the cost of an attack parallels the block rewards for incentivizing miners\/stakers. This demonstrates how decentralization is closely linked to reward systems. In XRP, the measure of decentralization is essentially zero!\u201d he remarks.<\/p>\n

Reflecting on his extensive research, Bons points out, \u201cI have analyzed XRP since its inception. The trade-off in decentralization was acknowledged in its early days. This has changed progressively as both the community and leadership intensified their claims. I aim to empower investors, not belittle them.\u201d <\/p>\n

Bons highlights the initial distribution of XRP, noting a \u201cshocking pre-mine of 99.8%,\u201d labeling it as \u201cone of the most unfair distributions ever.\u201d He stresses that since no new XRP is created, any additional circulating XRP must be purchased from the founders. \u201cThis adds to the unfair distribution claim since all new circulating XRP must be acquired from the founders!\u201d he states.<\/p>\n

Bons proposes that the way forward involves integrating a Proof of Stake mechanism to replace the UNL system, thereby transforming XRP into a more standard decentralized blockchain. \u201cPretending XRP is permissionless is not a viable solution. The real fix lies in incorporating PoS to replace the UNL list, shifting XRP towards a more traditional decentralized blockchain,\u201d he proposes.<\/p>\n

He concludes his discussion with a challenge for the XRP community: \u201cIf you genuinely care about XRP, take this seriously. Within this critique lie pathways for improvement\u2014either through genuine centralization or true decentralization. The truth will liberate us; act or push for change; nothing is beyond redemption.\u201d<\/p>\n

The community reacted swiftly with strong emotions. Panos Mekras, Co-founder of Anodos Finance, responded via X: \u201cYou\u2019re just embarrassing yourself publicly. Ripple is a private company, XRP existed before Ripple. The XRP Ledger has decentralization with hundreds of validators and nodes worldwide, where >80% validator agreement is necessary for control, and no single validator exceeds 2% control. These are facts. Either accept them or remain a delusional hater. Don\u2019t be a flat-earther.\u201d<\/p>\n

Another community member, identified as Krippenreiter (@krippenreiter), added: \u201cRipple is a company, my dear friend. Try again.\u201d Ripple Labs or its founders have yet to respond.<\/p>\n

As of the latest updates, XRP is trading at $2.55.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

In a recent post on X, Justin Bons, the Founder and Chief Investment Officer of Cyber Capital, Europe\u2019s oldest cryptocurrency fund, claims that the XRP Ledger (XRPL) operates in a centralized and permissioned manner, contradicting assertions made by Ripple executives. He also criticizes the XRP Foundation for allegedly misrepresenting the network\u2019s level of decentralization and […]<\/p>\n","protected":false},"author":14,"featured_media":24072,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"slim_seo":{"title":"\"XRP's Decentralization: Insights from Europe's Pioneer Crypto Fund Founder\" - Bitrabo","description":"In a recent post on X, Justin Bons, the Founder and Chief Investment Officer of Cyber Capital, Europe's oldest cryptocurrency fund, claims that the XRP Ledger ("},"footnotes":""},"categories":[316],"tags":[741,504,1332,2847,1387,1189,3695,517],"class_list":["post-24071","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-crypto-news","tag-claims","tag-crypto","tag-decentralized","tag-europes","tag-founder","tag-fund","tag-oldest","tag-xrp"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/posts\/24071","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/comments?post=24071"}],"version-history":[{"count":0,"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/posts\/24071\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/media\/24072"}],"wp:attachment":[{"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/media?parent=24071"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/categories?post=24071"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bitrabo.com\/discover\/wp-json\/wp\/v2\/tags?post=24071"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}