XRP Ledger Foundation – The Next Step Of XRP Decentralization?

On September 24 the newly established XRP Ledger Foundation (XRPLF) announced its existence in a press release and website. While the currently available information leaves a lot of open questions, I have asked the foundations spokesperson to elaborate.

The foundation has received initial grants of more than 6.5M USD from Ripple, Coil and Gatehub, to establish itself and reach the initial goal. A goal, which according to the press release, is setting up a foundation with representation from industry leaders, academics, and social visionaries and initially focusing on core technology, publishing a unique node list, support developers, sustainability initiatives, and social- and community initiatives.

Is Ripple Stepping Back From XRP?

People have raised concerns for years, that the lack of third party engagement in the XRP Ledger (XRPL), is because it is spearheaded and ultimately controlled by Ripple. If a single corporate entity has access to more than half of the total XRP supply, all efforts in enhancing the XRPL will ultimately benefit Ripple more than anyone else. The common response to this has been that while Ripple stands to gain the most from XRP adoption, they also stand to lose the most, as most XRP is locked away in escrows for several years. This balance has indirectly been the promise to invite other participants to the XRPL – a promise that the XRPL will continue to be developed, improved, and maintained.

In 2014, when Jed McCaleb exited Ripple and founded Stellar, his approach was to create a non-profit development foundation to support the growth of the open-source Stellar network. The XRPLF is a step in the same direction, although not initiated by Ripple, and a large step in the further decentralization of the XRPL. But, does this mean that Ripple is handing off the XRPL completely, as well as their promise of engagement?

David Schwartz, CTO at Ripple, comments in the press release that, “We and the community have worked over the past 8 years to dramatically increase the decentralization, performance, and feature set of the XRP Ledger and remain committed to its future growth and innovation led by the Foundation”, and in a tweet, Nik Bougalis, Director at Xpring adds that the Ripple C++ team will continue core technology contribution:

I asked Bharath Chari, spokesperson for the XRPLF, to elaborate on the announcement:

Q: Is the XRPLF, and it seemingly leading the future development of the XRPL an indication that Ripple is not as invested in the future of the XRPL any longer?

A: We don’t see this as being the case at all, even though this question is better answered by Ripple. As in the case of many open-source projects, stakeholder companies invest time and resources in helping develop it. The XRPLF sees Ripple in a continued role as a key developer on both the technical and business aspects of the XRPL. Furthermore, the XRPLF is only an entity that promises to act in the best interests of the XRPL. There is no question of controlling an open, decentralized ecosystem like the XRPL. 

Q: 6.5M USD is a lot of money, and a clear indication of engagement, but it is only a fraction of the non-circulating supply of XRP Ripple has access to. So by logic, the “most to gain, most to lose”-promise of Ripple still stands, and the XRPLF is an added promise to third-party developers: the XRPL is still being maintained and used by Ripple, but they are handing off even more control in a decentralization effort?

A: The non-circulating supply isn’t of any concern to the XRPLF. We are purely focused on the health and forward direction of the XRPL. As answered earlier, and also indicated in some other statements by Ripple, they are committed to the greater good of the XRPL, including devoting resources to develop on it. 

Q: Have you made long-term arrangements with Ripple to allocate a share of the non-circulating XRP supply to the XRPLF?

A: No such discussion has been had. The Foundation is concentrating on the initial roadmap as outlined in our release. 

The Core Decentralization

It is near impossible to have conversations about XRP and Ripple, without also talking about decentralization. While Ripple has put great effort into decentralizing the XRP network, by adding non-Ripple validators to the recommended Unique Node List (UNL), critics have said that as long as the “official” UNL is still published by Ripple, they ultimately still have complete governance of the network.

Q: You plan to publish a Unique Node List, and have transparent criteria for selection and performance. Does changing the UNL not come with great risks of forking the network?

A: Since one of our core values is to act in the best interest of the XRPL, we would of course work closely with other list publishers to ensure that no fork risk occurs. Being open, every node on the XRPL is free to choose the validators they trust, including manually. 

Q: Do you have any arrangements with Ripple to take over the XRPL server software repository?

A: There are no immediate plans to take over the repository. As we build resources, we will work our way through merge access and then finally towards repository and packaging. Remember, this is an open-source distribution, so the published binaries are only reference implementations.

Developer Relations, Xpring And The XRP Community Fund

Ripple launched Xpring to support XRPL and Interledger Protocol ecosystem projects and development through investments, developer relations, and the development of tools to help integrate the technologies more easily. Most recently they have spearheaded the PayID project.

While Xpring is a branch of Ripple, the XRPLF is an independent foundation, but share some of the same objectives: a focus on the developer ecosystem. And with the XRP Community Fund (XCF) also being set up, it suddenly appears like there will be a competition for developer attention.

Q: Are the objectives of Xpring, XRPLF, and XCF aligned, and can you share more about that?

A: Without commenting on the objectives of Xpring, we certainly feel that there will be more options for developers to seek funding/grants depending on the nature of the work. The XRPLF, per se, is more involved with the broader scope of the XRPL, and evolution of the core code, including security, scalability, sustainability, and social impact. That means we will not be competing with developers in the creation of application layers. So, finally, it is up to developers to choose who is the best party that is aligned with what they are delivering. 

Q: When will we learn more about the XRP Community Fund, and is that also being initiated by yourself and Wietse Wind?

A: The XCF will be a separate entity from the XRPL Foundation. The management will also be entirely different and have greater interaction and involvement with the community at large. As you know, these are early days and more information will be released as things solidify.

Q: There are many projects, both large and small, built on and around the XRPL: e-commerce payments, wallets, XRPL amendments, community initiatives, and more. Do you have any public guidelines as to who they should contact, and what kind of support they can expect?

A: As mentioned earlier, that depends on what the nature and scale of the project are. Certainly community initiatives would be addressed by the XCF. Guidelines and contact points, while not yet published, are being worked on. These guidelines will of course take the larger developer inputs into consideration.

The Foundation Board

Q: What do you see as the future of the XRPLF board composition, going forward. Do you have other people already aligned for seats, and do you have any models set up for e.g. rotating seats, stakeholder seats, corporate memberships?

A: Great question, and we fully recognize that most, if not all, people working on the XRPLF currently are placeholders for the initial period of setup. We hope to have a larger representation of the ecosystem stakeholders, and all of the things you mentioned in the question are on the table. Maybe not at the same time, but as it evolves.

Q: The UNL has the ultimate voting power of the XRPL network (e.g. amendments and fees). So the XRPLF will not have any governance of the XRPL network directly. Do you have a planned overlap between foundation board seats and the UNL?

A: Any overlap will be coincidental, not forced in any way. The main criteria for inclusion in the UNL we publish would not only be based on ecosystem participation but on hard technical evidence of being able to cope with the rigorous demands of maintaining high agreement rates. Especially being able to scale as the demands on the XRPL go up, which is what the main objective of the XRPLF is. We hope to be able to publish a guideline set for inclusion in our UNL in the near future. 

Conclusion

Decentralization may be divided in three phases:

1. Network: Introducing diversity to the recommended UNL, removing Ripple as a majority infrastructure provider. Even though the XRPL is inherently decentralized, as every validator can change the UNL and its trusted validators, most validators rarely does so.
2. Core: Core development and recommended UNL managed by a third party.
3. Financial: Overall distribution of XRP, where close to half of all XRP is currently in escrows and released to Ripple over time.

Phase 1 started in May 2017, and has been done for a long time. Phase 2 is happening now. But what about phase 3? If the XRPLF proves to be great advocates of the XRPL and foster growth and adoption of the XRPL ecosystem, could we see Ripple allocate some escrow releases to the foundation directly in the future?