Ripple is exploring the possibility of adding staking to the XRP Ledger (XRPL). This move would deepen the blockchain’s involvement in decentralized finance (DeFi).
The discussion started after J. Ayo Akinyele, head of engineering at RippleX, shared a blog post. Akinyele discussed how staking could expand XRP’s utility and reshape incentives for validators and token holders.
Akinyele thinks staking might help bring about participation in the long term. It would also enhance network security, as it would reward consensus holders.
Nevertheless, staking would involve significant architectural restructuring of XRPL. To accomplish a deflationary supply, the ledger is now incinerating transaction fees. This would require modifications to this fundamental system in order to support staking rewards.
Ripple explores new features to keep XRP Ledger competitive
XRP Ledger was initially intended to be fast and efficient in cross-border payments. As XRP continues to become popular, Ripple is looking into new features that would make the network competitive.
The introduction of staking raises concerns about the guiding principles of the XRPL. The Proof of Association model is used in the network and does not focus on economic incentives. The transition to a reward-based system might raise these fundamental principles.
David Schwartz, the CTO of Ripple, posted two examples of possible models of introducing staking. The former is a two-layer system of consensus in which there is an incentivized inner circle of validators. Slashing and staking would be utilized by these validators.
The second model would support the prevailing consensus system. It would invest transaction fees in zero-knowledge verification (ZKP). ZKPs enable proving facts anonymously, securing trust-minimized validation.
Schwartz has cautioned that these two suggestions only remain a far-off reality. It would require a lot of engineering work and adjustments to the structure, and staking could not be done soon.
Skinny Fed accounts to enhance stability and liquidity
This month, the chief legal officer of Ripple, Stu Alderoty, spoke on a suggestion by Federal Reserve Governor Christopher Waller. Waller advised that crypto companies have the opportunity to open skinny Fed accounts.
This may decrease the use of conventional banks and transform the digital asset landscape of the US.
Alderoty referred to the proposal as a transformative proposition for the digital asset space. He thinks that it will help to shorten settlement time and decrease expenditures.
It would also enable the RLUSD stablecoin offered by Ripple to compete with market giants such as Tether and Circle.
Alderoty also mentioned that having direct access to the Fed would enhance stability and liquidity. It would facilitate the rapid shift of firms between Treasuries of the US and dollars without bank intermediaries.