In-Depth Analysis of XRP: From Technology to Meme Coin Trading Guide

Original author: Ignas | DeFi Research

Compiled by: Yuliya, PANews

In today’s cryptocurrency market, a remarkable phenomenon is happening: XRP has skyrocketed 3.5 times in just one month, and its market value has even surpassed that of Solana. This spectacular market performance once again confirms the unpredictability of the cryptocurrency market.

Although XRP has been controversial within the cryptocurrency community, market choices often transcend personal bias.

As the meme coin market thrives, the XRP ecosystem could become an important battleground for a new round of speculative craze.

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

What is XRPL?

XRP Ledger presents itself as a blockchain platform that seeks speed and efficiency.

However, in reality, it is not optimal in terms of speed, decentralization and effectiveness (notably efficiency, which remains controversial).

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

The specific working mechanism is as follows:

The entire network has over 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.

Although any entity can theoretically execute and issue UNL, this mechanism of relying on UNL actually carries centralization risks, as Ripple and the XRP Ledger Foundation largely control the selection of the UNL. UNL by default. New validators generally must be approved by Ripple Labs, hence the name “federated consensus”.

XRP transaction confirmation time is 3-5 seconds. In comparison, Solana is far ahead in terms of number of nodes, transaction speed and smart contract capabilities. However, XRP transaction fees are almost zero, just 0.00001 XRP per transaction.

Trust lines, reserves and drive mechanism

Wallet activation and reserve requirements

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

An account activation requires at least 10 XRP as a base reserve. Additionally, for every token held, the system requires 2 additional XRP to be locked as the owner’s reserve. For example, if you hold 20 Meme Coins, you need to lock in an additional 40 XRP.

A governance vote is currently underway to propose reducing these requirements by ten. Users can view the current specific requirements under the “base reserve” and “owner reserve” tabs in XRP Scan.

Analysis of the trust lines mechanism

Trust Lines is the infrastructure used by XRPL to hold homogeneous tokens. According to Ripple’s official documentation: “Trustlines enforce XRPL’s rules to ensure that others are not forced to hold unwanted tokens. This precaution is essential for realizing use cases such as XRPL’s community credit. »

The core values ​​of Trust Lines are:

• Prevent forced receipt of spam tokens

• Allows the establishment of freeze and authorization controls

• Support for “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 sender sends 100 tokens, their trustline balance is -100 and the receiver’s trustline balance is +100.

The Ripple Mechanism Explained

Rippling (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. It is a passive trading system that allows atomic settlement without the involvement of the issuer.

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

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

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 oversight.

Although this centralized control may attract criticism from decentralization advocates, this 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 based on their needs:

Enable Ripple Adjustment:

• Users wishing to use their account for 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 ripple adjustment:

It is important to note that every time a trustline is established (e.g. establishing a connection with the issuer of a meme coin), 2 XRP must be locked in the wallet as a reserve .

Technical evolution of XRPL: from hooks to EVM sidechains

Compared to Ethereum’s EVM, Solana’s SVM or Aptos’ Move VM, XRPL takes a different technical path. It uses a Hooks system based on WebAssembly, which is a lightweight transaction logic program.

Hook system

Hooks are XRPL’s unique answer to smart contracts. Interestingly, they currently operate on the Xahau network (a fork of XRPL) rather than the XRPL mainnet. Hooks can add additional logic before and after transactions, such as:

It is worth mentioning that Uniswap v4 also uses a similar hooks mechanism to add additional functions before and after transactions and support features such as limit orders.

EVM Sidechain: expansion of the XRPL ecosystem

Although XRPL already has native AMM functionality that supports liquidity provision and cross-token transactions, Ripple is developing an EVM sidechain to enable more efficient capital flows with other DeFi chains and applications.

Main features

• Currently in testing phase

• Launch planned in a few months

• XRP will be used as a gas token

• Using Axelar as a cross-chain bridge solution

Community controversy

The XRPL community is technically divided:

It is worth noting that the bridge between EVM and XRPL is powered by Axelar. If this ecosystem develops smoothly, Axelar could become a major beneficiary.

Future outlook

XRPL is moving towards modularization, which represents an important technological turning point. The development trend of EVM sidechain will be a topic worthy of attention, which may bring new application scenarios and development opportunities for XRPL.

These technological innovations will bring more possibilities to XRPL, particularly in the field of DeFi. As the ecosystem continues to develop, we may see more innovative application scenarios emerge.

A Complete Guide to Trading Meme Coins on XRP

XRPL has a built-in AMM (automatic market maker) feature and is currently primarily used for Meme coin transactions.

Around 14 million XRP is deposited in the AMM pool. Although the TVL is relatively low, trading volume continues to increase due to the Meme coin craze. (You can view the pool block amount via XRP Scan.)

To start

1. Portfolio selection

• Visit the First Ledger website to create a wallet via Telegram, or create it directly in your browser and save your keys locally.

• You can also try the Xaman wallet on mobile. This works well and you can import keys between the two wallets to see which one works best for you.

2. Get XRP

Buy on a centralized exchange or use the Simpleswap cross-chain bridge.

3. Trading platform

• The First Ledger token list is updated in real time and can be sorted by 24-hour trading volume, market value, number of holders, and time of creation.

• xMagnetic (Advanced Platform) provides token discovery, liquidity provision and data analysis functions, and is recommended for use with the Xaman wallet.

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

Risk Warning

Most Meme coins are controlled by a few wallets, and it is common for 10 wallets to hold more than 40% of the supply. Pump.fun is really needed on XRPL to make token issuance fairer. Pay attention to early drafts, pay attention to trading volume, check holder distribution, and be careful with new coins.

Investing in Memecoin requires caution, risk control, and sufficient research. Remember: you must understand the fundamentals of the project before trading and avoid impulsive investments.