XRP Depth Analysis: From Technical to Memes Trading Guide

Original author: Ignas | Decentralized Finance Research

Compiled by: Yuliya, PANews

In the current Crypto Assets market, a striking phenomenon is unfolding: XRP has big pump 3.5 times in just one month, and its Market Cap has even surpassed Solana. This dramatic market performance once again confirms the unpredictability of the Crypto Assets market.

Although XRP has been controversial in the Cryptocurrency community, market choices often transcend personal prejudices.

With the booming development of the memes coin market, the XRP ecosystem may become an important battlefield for a new round of speculation frenzy.

This article will delve into the operation mechanism, Token trading methods, core concepts, and directions for in-depth research of the XRP Ledger (XRPL).

What is XRPL?

The XRP Ledger prides itself as a Block chain platform that pursues speed and efficiency.

However, in fact, it is not optimal in terms of speed, decentralization, and efficiency (especially efficiency, which is still subject to considerable controversy).

Unlike blockchains using PoW or PoS, XRPL uses a federated Consensus Mechanism, where validators can achieve transaction Consensus without the need for Mining or stake.

The specific operation mechanism is as follows:

The entire network has more than 109 validators processing transactions, with 31 trusted validators forming the unique Node List (UNL) for Consensus. These validators include Arrington XRP Capital, BifrostWallet, Ripple, and XRPscan.

Although theoretically any entity can run and release a UNL, the reliance on this mechanism actually brings centralization risks, as Ripple and the XRP Ledger Foundation largely control the selection of the default UNL. New validators typically need approval from Ripple Labs, which is also the origin of the term "Federated Consensus".

The transaction confirmation time of XRP is 3-5 seconds, which is far behind Solana in terms of the number of Nodes, transaction speed, and Smart Contract capabilities. However, the Money Laundering of XRP is almost zero, only 0.00001 XRP per transaction.

Trust Lines, Reserve Fund and Rippling Mechanism

Wallet activation and reserve fund requirements

When creating a wallet in the XRPL ecosystem, there are some unique requirements to keep in mind:

Activating an account requires a minimum of 10 XRP as a base reserve. In addition, for each Token held, the system also requires an additional 2 XRP to be locked as an owner's reserve. For example, if you hold 20 memes, you need to lock an additional 40 XRP.

A governance vote is currently underway proposing to drop these requirements by tenfold. Users can check the current specific requirements under the "base reserve" and "owner reserve" labels on XRP Scan.

Trust Lines Mechanism Analysis

"Trust Lines" is the foundational structure in XRPL for holding Fungible Tokens. According to the official Ripple documentation: "Trust lines enforce the rules of the XRPL, ensuring that no one is forced to hold unwanted tokens. This preventative measure is crucial for use cases such as community credit in the XRPL."

The core value of Trust Lines is:

Prevent mandatory receipt of junk Token

Allow freezing and authorization control

Support "No Ripple flag" to prevent accidental balance adjustments

When the Token issuance party creates a Token, its balance may become negative, indicating the quantity issued, while the holder's balance is positive. For example, after the issuance party sends 100 Tokens, its trust line balance is -100, and the recipient's balance is +100.

Rippling Mechanism Detailed Explanation

Rippling (also the origin of the name Ripple) further expands this concept, allowing Token balances to automatically flow through connected accounts during the payment process. This is a passive exchange system that achieves atomic Settlement without the need for the issuer to participate.

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

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

Achieve efficient net Settlement

Support Real World Assets (RWA)

Stablecoin Trading

tokenization goods

Cross-border payment

This design gives the Token issuance party greater control. In particular, in terms of compliance requirements, the authorized Trust Lines issuance party can enable the 'Require Auth' flag to restrict all permissions of the Token within the approved account range. This makes XRPL particularly suitable for assets that require strict KYC/AML regulations.

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

After understanding the working principle of Rippling, users can choose to enable or disable this feature according to their own needs:

Enable Rippling is suitable for:

Users who hope that the account is part of the payment path

As an account of intermediary, such as a market maker or exchange (it is currently unclear whether fees can be earned through this function)

Disabling Rippling is suitable for:

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

Ordinary users who want to protect their assets from unexpected adjustments

It is important to note that for each trust line established (such as connecting with the memesissuance party), 2 XRP needs to be locked as a reserve in the Wallet.

XRPL Technical Evolution: From Hooks to EVMSidechain

Compared to the EVM of Ethereum, the SVM of Solana, or the Move VM of Aptos, XRPL adopts a different technological approach. It uses a Hooks system based on WebAssembly, which is a lightweight transaction logic program.

Hooks system

Hooks are XRPL's unique answer to Smart Contracts. Interestingly, they are currently running on the Xahau network (a fork of XRPL) instead of XRPL Mainnet. Hooks can add additional logic before and after transactions, such as:

Prevent fraudulent payments

Auto Save XRP

Add carbon offset to trading

It is worth mentioning that Uniswap v4 also adopts a similar hooks mechanism to add additional functionality before and after transactions, supporting features such as limit orders.

EVMSidechain: Expand XRPL ecosystem

While XRPL already has native AMM functionality, supporting Liquidity provision and cross-token trading, Ripple is developing EVMSidechain to achieve more efficient capital flow with other chains and Decentralized Finance applications.

Key Features

Currently in testing phase

Expected to go live in a few months

XRP will be used as gasToken

Using Axelar as the cross-chain bridges solution

Community controversy

The XRPL community has divergent views on the technical roadmap:

Some people want to implement Hooks functionality on the Mainnet

I have doubts about the necessity and role of EVMSidechain

It's worth following that the bridge between EVM and XRPL is supported by Axelar. If this ecosystem develops smoothly, Axelar may become an important beneficiary.

Outlook for the Future

XRP Ledger is evolving towards modularity, which represents an important technological turning point. The development trend of EVM sidechains will be a focus worth following, as it may bring new application scenarios and development opportunities to XRPL.

These technological innovations will bring more possibilities to XRPL, especially in the application of Decentralized Finance. With the continuous development of the ecosystem, we may see more innovative application scenarios.

Complete Guide to Trading Meme Coins on XRP

XRPL has built-in AMM (AMM) functionality, mainly used for memes trading at present.

Approximately 14 million XRP deposited into the AMM pool, although the TVL is relatively low, the volume continues to rise due to the meme coin craze. (The pool lockup amount can be viewed through XRP Scan.)

Trading Basics

1. Wallet selection

Visit the First Ledger website, you can create a Wallet through Telegram, or directly create and save the Secret Key locally in the browser.

Alternatively, you can also try the mobile XamanWallet. It runs well, and you can import the Secret Key between these two Wallets to see which one suits you better.

2. Get XRP

Buy or use Simpleswap cross-chain bridges from Centralized Exchange.

3. Trading Platform

First Ledger (Preferred Entry) Token list is updated in real time, supporting sorting by 24h volume, Market Cap, number of holders, and creation time.

xMagnetic (Advanced Platform) provides Token Discovery, Liquidity Provision, and Data Analysis capabilities. It is recommended to use with XamanWallet.

Sologenic DEX can be used as an alternative trading platform, but the user experience may not be as good as the above-mentioned platforms. It is recommended to use Xaman Wallet together with xMagnetic.

Risk Warning

Most memes are controlled by a few wallets, with 10 wallets commonly holding over 40% of the supply. Pump.fun is indeed needed on XRPL to make token issuance more fair. Follow early projects, pay attention to volume, check the distribution of holders, and be cautious with new coins.

Investing in memes requires caution, risk management, and thorough research. Remember: be sure to understand the fundamentals of the project before trading to avoid impulsive investment.