Native Staking on XRPL? Ripple Engineering Lead Breaks Down How It Could Work

The XRP network is growing rapidly, with new protocols and applications emerging in the ecosystem regularly. This growth has sparked discussions about implementing additional features that could enhance the network’s utility and capabilities.

One such feature being explored is native staking. While staking could reward participants on the XRP Ledger (XRPL), implementing it may be difficult due to the blockchain’s core design.

Exploring Native Staking on the XRPL

Ripple’s head of engineering, Ayo Akinyele, explained in a series of tweets that bringing native staking to XRPL would challenge long-standing design principles. For starters, XRPL’s consensus mechanism does not support staking; instead, it relies on trust and stability among validators.

The XRPL uses a Proof-of-Association (PoA) consensus model, unlike most networks that use either Proof-of-Work (PoW) or Proof-of-Stake (PoS). Because of its consensus model, the network burns transaction fees rather than distributing them. Validator trust is also earned by consistency, not financial stake.

Akinyele believes the real issue is how native staking will fit into the XRPL’s network design, not how large the rewards system will be. The network’s focus may shift from prioritizing quick, efficient asset settlement to financial incentives.

Possible Effects on Validators and Participants

According to the engineering lead, the XRPL needs a source of staking rewards and a fair distribution mechanism to successfully implement native staking for XRP. At the core, there would be changes in how value flows through the XRPL – it is crucial to identify a sustainable way to reward participation without inflating XRP supply.

The Ripple team ensures XRP sustains a deflationary supply trend by burning all transaction fees. However, introducing staking could entail channeling a portion of fees (or costs from programmability features) into a rewards pool rather than burning them all. This could affect the deflationary supply of XRP, as more coins would enter circulation.

As for distribution, Akinyele insisted that staking could not just change the interaction between validators and participants but also affect governance dynamics. Therefore, the focus remains on corresponding incentives and penalties in a way that maintains the network’s fairness and resilience.

Meanwhile, Ripple’s Chief Technology Officer, David Schwartz, is proposing a two-tier staking system, which will introduce rewards while preventing the centralization of power on the XRPL. These suggestions come shortly after asset manager Canary Capital launches the first-ever XRP spot exchange-traded fund in the United States.

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