Is Staking on the Horizon for XRP Ledger?
Potential for Staking on XRP Ledger
J. Ayo Akinyele, Head of Engineering at RippleX, has published an in-depth analysis on the potential for native staking on the XRP Ledger (XRPL), stirring conversations on the future of its incentive and governance frameworks.
This initiative emerges as XRPL's DeFi impact remains limited despite 13 years of operation. Ripple's executives, David Schwartz and Brad Garlinghouse, advocate for XRPL's expansion beyond its payment-centric roots into the broader DeFi landscape.
Ripple Engineers' Vision for XRP Staking
Akinyele notes that XRP has evolved significantly, now facilitating liquidity and tokenization alongside real-time value movement. The launch of the first XRP ETF underscores its increasing significance.
“When I think about how XRP’s utility could keep expanding alongside new capabilities, a question naturally comes up: What if the XRP Ledger (XRPL) supported native staking? What would that mean for network design and the asset itself?” Akinyele wrote.
He explains that XRPL's Proof of Association consensus differs from traditional Proof-of-Stake systems, with fees being burned and validator trust based on performance. For native staking, two essentials are a reward source and fair distribution.
“For XRP native staking to exist, two things would be essential: first, a source of staking rewards, and second, a way to distribute them fairly,” Akinyele added.
Implementing this feature would necessitate rethinking value circulation while maintaining XRPL's stability and decentralization.
Schwartz, a key XRP Ledger architect, also contributes to the dialogue, suggesting two experimental concepts within the engineering sphere.
The first concept is a dual-layer consensus model, featuring an inner validator layer selected by stake from the outer layer, employing staking and slashing solely for ledger advancement.
The second proposal retains XRPL's existing consensus, using transaction fees for zero-knowledge proofs to validate smart contract execution, eliminating the need for nodes to run contracts themselves.
“On two-layer consensus: It’s a lot of work and risk. The benefits to network stability and robustness are largely theoretical and there aren’t any current issues in either area……On the ZKP mechanism: It’s very cutting edge and complex technically. If there isn’t a lot of uptake, it will be a lot of work for zero gain,” he remarked.
As programmability and smart contract discussions advance, Schwartz believes it's timely to consider future native DeFi capabilities.
“XRP Ledger was created in 2012. The world of blockchain has changed many, many times over since then. My own thoughts on governance and consensus models have evolved. I’ve been mulling over how XRP is used in DeFi (both organically with apps and protocols like Flare, MoreMarkets, Axelar, Doppler, etc) and natively onchain,” he commented.
These discussions engage the XRP community, as XRPL's DeFi presence remains modest. DeFiLlama reports XRPL holds $75.77 million in total value locked (TVL), compared to Ethereum’s $71.36 billion and Solana’s $9.443 billion.
Introducing native staking could attract more capital from investors seeking reliable yields, potentially boosting XRPL's growth within the DeFi ecosystem and expanding XRP's utility.