Rethinking the Ledger’s Core Purpose

Ripple is considering a fundamental evolution for the XRP Ledger (XRPL), exploring the integration of staking to push the long-standing blockchain into the world of Decentralized Finance (DeFi). The conversation gained momentum after J. Ayo Akinyele, head of engineering at RippleX, outlined how staking could significantly expand XRP’s utility.

Akinyele argued that introducing staking would incentivize long-term participation from token holders and strengthen network security by rewarding those who help maintain consensus. However, this isn’t a simple update. Implementing staking would require a major overhaul of the ledger’s core architecture. The XRPL was originally designed for efficient cross-border payments, a system that burns transaction fees to create a deflationary supply. Shifting to a model that redistributes those fees as staking rewards challenges its foundational principles, including its trust-based Proof of Association consensus model.

Two Theoretical Paths to Staking

Ripple CTO David Schwartz detailed two potential, though still theoretical, approaches to bring staking to the XRPL. The first concept involves a dual-layer consensus model. It would feature an incentivized “inner” layer of roughly 16 validators selected based on their stake. This core group would manage the ledger using staking and slashing mechanisms, while a broader “outer” layer would oversee governance.

A second, less disruptive approach would maintain the current consensus mechanism but redirect fees to fund zero-knowledge proof (ZKP) verification. ZKPs offer a trust-minimized way to validate participation by allowing users to prove facts without revealing underlying data. Schwartz emphasized that both ideas are distant prospects, requiring extensive engineering and risk assessment before they could become a reality.

Ripple Eyes Greater Integration with Traditional Finance

In a related development, Ripple has voiced support for a U.S. Federal Reserve proposal that could reshape how crypto firms interact with the traditional financial system. Fed Governor Christopher Waller suggested allowing crypto companies, including stablecoin issuers, to access “skinny” Fed master accounts. This would grant them direct entry into the Fed’s payment rails, bypassing traditional banks that are often reluctant to serve the crypto sector.

Ripple’s Chief Legal Officer, Stu Alderoty, highlighted the proposal’s potential benefits. He noted that direct Fed access could accelerate settlement times, reduce operational costs, and boost the adoption of Ripple’s forthcoming RLUSD stablecoin. By enabling firms to move seamlessly between U.S. Treasuries and dollars without intermediaries, the move would enhance both stability and efficiency in a competitive stablecoin market.