In a mail On Bones also accuses the XRP Foundation of misleading investors about the decentralization of the network and exercising complete control over it.
Here’s why XRP is central
“Ripple is centralized and permissioned, contrary to the claims of its executives.
Central to Pons’s argument is the assertion that the consensus mechanism relies on Unique Node Lists (UNLs), which are centralized lists of trusted nodes issued by individual entities, including the XRP Foundation. He explained that this setup is more consistent with a Proof of Authority (PoA) system rather than decentralized consensus mechanisms like Proof of Stake (PoS) or Proof of Work (PoW). “The consensus of XRPs is based on UNLs (…)
Bones stresses that while users can modify their UNLs and choose who to trust, this does not mean a trustless system – a key characteristic of truly decentralized cryptocurrencies. “The nuances of language here are subtle but very important. Decentralized cryptocurrencies are truly ‘trustless’, as zero ‘trust’ is required. Choosing who to trust is not the same as not trusting!” he argues.
It also points out that if there is not enough overlap between a user’s UNL and the rest of the network — 90% overlap is needed to prevent branching — the user risks being disconnected. “If there is not enough overlap between your UNL and the rest of the network; you will be kicked out!” According to their own documents; 90% overlap is required to prevent forking; resistance is futile! Pons states.
Pons emphasizes that in practice, obtaining direct permission from the XRP Foundation is necessary to participate in the consensus. “This means that in practice; Direct permission from the XRP Foundation is required to participate in the consensus. “This is as central as it gets when it comes to blockchain design,” he adds.
Digging deeper, Pons pointed out that for a long time, there was only one UNL — the default UNL (dUNL) — that was hosted by the organization and coded as default. “We decided that UNLs are trusted third parties that were ultimately chosen by the XRP Foundation. This is reinforced when we dig deeper into these UNLs: for the longest time, there was only one UNL; dUNL by default”.
He criticizes the dynamic nature of these checklists, which are based on a web address hosted by the XRP Foundation. “This means they can change the list of validators instantly without prior notice and in a completely centralized way! Kick out everyone who violates authority,” Bones says.
Bones highlighted that over time, two more “official” UNL lists were added – although one of them, Coil, has since ceased operations – leaving the dUNL and XRPLF lists, both of which are funded directly by the XRP Foundation. “This adds another layer of physical control over the network,” he says.
He argues that the lack of incentives, such as the collective rewards found in proof-of-work (PoW) or proof-of-stake (PoS) systems, means that disparate parties cannot coordinate effectively without trust. “Blockchain allows disparate parties that do not trust each other to coordinate. All thanks to the underlying incentive mechanism (PoS or PoW) – however, XRP has no block rewards and no incentives; it is built solely on trust,” he explains.
Bones asserted that the new UNL companies could not coordinate with each other due to the absence of these incentive mechanisms, resulting in de facto total corporate control. “Because if the new UNLs cannot coordinate, it means that the institution has de facto complete control. Control of the validators equals control of the network! Giving permission to universities and companies to run nodes is exactly what a permissioned blockchain consortium looks like!” announces.
It also reveals that all UNL addresses are actually identical, and contain the same validator sets. “Upon closer inspection, all of the UNL addresses are actually identical to each other! With the same validator sets! Which further proves that the Foundation has practically complete control over the network!” Pons states.
“This proves that the new UNLs cannot coordinate with each other! Forcing the Enterprise List to become a de facto List. All UNLs must comply or risk secession!” he added.
Bones expresses concern that this level of control allows the organization to implement oversight if it has to do so. “This also allows the organization to implement oversight if they have to. They have such a high degree of control! This is completely different from how cryptocurrencies are supposed to work! Explaining why it only takes 20% of validators to shut down the network.” warns.
He also points out that there are no rewards for running a trusted validator, unlike Proof of Work (PoW) or Proof of Stake (PoS) models where validators are incentivized. “There are also no rewards for running a trusted validator. Unlike Proof of Work (PoW) or Proof of Stake (PoS), where the cost of attack mirrors prevents the reward for miners/stakers. This is why the decentralization measure is closely linked to this reward. For XRP, This measure of decentralization is zero!
Speaking about its history, Bones said: “I have been researching XRP since the early days. I clearly remember that swapping was recognized in decentralization. This has gradually changed as the community and leadership have become more extreme in their claims. I am not saying this to belittle investors but To empower them!
He highlights the initial distribution of the coin, noting the “shocking 99.8% pre-mining ratio,” which he describes as “one of the most unfair distributions ever.” Bones emphasized that since no new coins are being created, all new XRP in circulation is purchased from founders. “This makes it one of the most unfair distributions ever. Since no new XRP is created, all new XRP in circulation is bought from the founders!” he says.
Bones suggested that the solution is to add a proof-of-stake mechanism to replace the UNL system, thus turning XRP into a more traditional decentralized blockchain. “Pretending that XRP is not allowed is not the right solution. The real solution is to add PoS to replace the UNL list!” He proposes converting XRP to a more traditional decentralized blockchain.
He concluded his post with a call to action for the community: “If you really care about XRP, take this seriously. As is the case with this critique, the solutions that can help XRP succeed are either honest centralization or decentralization. We are freed; to leave or to exert pressure for change; because there is nothing beyond redemption.
Community reactions were swift and full of indignation. Panos Mikras, co-founder of Anodos Finance, responded via X: “You are publicly embarrassing yourself. Ripple is a private company, XRP existed before Ripple, and the 80% control and no auditor has more than 2% control. These are the facts. Either you accept it or you are a delusional hater.
Another community member, known as Krippenreiter (@krippenreiter), commented: “Ripple is a company my dear friend. Try again.” Ripple Labs or its founders have not yet commented.
At press time, XRP was trading at $2.55.
Featured image created with DALL.E, a chart from TradingView.com