A Deep Dive into XRP Ledger (XRPL): Operating Mechanism, Token Trading Methods, and Future Outlook

XRPL has skyrocketed 3.5 times in just one month, and its market value has even surpassed Solana. This dramatic market performance once again confirms

In the current cryptocurrency market, XRP has indeed performed remarkably, skyrocketing 3.5 times in just one month. Its market value has even surpassed Solana, once again highlighting the unpredictability of the cryptocurrency market.

Although XRP has been a controversial topic in the cryptocurrency community, market choices often transcend personal biases. As the meme coin market continues to flourish, the XRP ecosystem could become an important battleground for a new round of speculative craze.

This article will deeply analyze the operating mechanism of XRP Ledger (XRPL), token trading methods, core concepts, and in-depth research directions.

What is XRPL?

XRP Ledger bills itself as a blockchain platform that pursues speed and efficiency. However, in reality, it is not optimal in terms of speed, decentralization, and efficiency (especially efficiency, which is still controversial).

Unlike blockchains that use PoW or PoS, XRPL uses a federated consensus mechanism, where validators can reach transaction consensus without mining or staking.

The specific operating mechanism is as follows:

The entire network has more than 109 validators processing transactions, of which 31 trusted validators form the Unique Node List (UNL) for consensus. These validators include Arrington XRP Capital, Bifrost Wallet, Ripple, and XRPscan.

While any entity can theoretically run and issue UNL, this mechanism of relying on UNL actually brings centralization risks, because Ripple and the XRP Ledger Foundation largely control the selection of the default UNL. New validators usually need to be approved by Ripple Labs, which is the origin of the name "federated consensus".

XRP's transaction confirmation time is 3-5 seconds. In comparison, Solana is far ahead in terms of node number, transaction speed, and smart contract capabilities. However, XRP's transaction fee is almost zero, only 0.00001 XRP per transaction.

Trust Lines, Reserves and Rippling Mechanism

Wallet Activation and Reserve Requirements

When creating a wallet in the XRPL ecosystem, there are some unique requirements to be aware of:

An account activation requires at least 10 XRP as a base reserve. In addition, for each token held, the system requires an additional 2 XRP to be locked as an owner reserve. For example, if you hold 20 Meme coins, you need to lock an additional 40 XRP.

There is currently a governance vote underway to propose reducing these requirements by a factor of ten. Users can view the current specific requirements under the "base reserve" and "owner reserve" tabs in XRP Scan.

Trust Lines Mechanism Analysis

Trust Lines is the infrastructure used by XRPL to hold homogeneous tokens. According to Ripple's official documentation: "Trust lines enforce the rules of XRPL to ensure that others are not forced to hold unwanted tokens. This precaution is critical to achieving use cases such as XRPL's community credit."

The core values of Trust Lines are:

Preventing forced receipt of spam tokens

Allows freezing and authorization controls to be implemented

Support "No Ripple flag" to prevent accidental balance adjustments

When a token issuer creates a token, its balance may become negative, indicating the amount issued, while the holder's balance is positive. For example, after the issuer sends 100 tokens, its trust line balance is -100, and the receiver's balance is +100.

Rippling Mechanism Explained

Rippling (which is where the name Ripple comes from) takes this concept a step further by allowing token balances to flow automatically through connected accounts during the payment process. This is a passive exchange system that allows atomic settlement without the involvement of the issuer.

For example: if Alice owes Bob $10, and Bob owes Charlie $10, the rippling mechanism allows Alice to pay Charlie directly while automatically adjusting the balances on all trust lines.

This design is similar to a double-entry accounting system and is primarily used for:

Achieve efficient net settlement

Backed by Real Assets (RWA)

Stablecoin trading

Tokenized Commodities

Cross-border payments

This design gives asset issuers greater control. In particular, in terms of compliance requirements, authorized Trust Lines issuers can enable the "Require Auth" flag to limit token ownership to approved accounts. This makes XRPL particularly suitable for assets that require strict KYC/AML supervision.

Although this centralized control may draw criticism from supporters of decentralization, it is precisely the unique advantage of XRPL in specific application scenarios.

After understanding how Rippling works, users can choose to enable or disable this feature according to their needs:

Enable Rippling Fit:

Users who wish to use their account as part of a payment routing

Accounts acting as intermediaries, such as market makers or exchanges (it is not yet clear whether fees can be earned through this feature)

Disable Rippling Fit:

Users who do not want their balance to be used for payment routing