This article examines the functional role of XRP in the XRP Ledger ecosystem, highlighting its significance as a necessary component for system functioning.
XRP as a Required Component for Ledger Interaction
A recent post by XRP-centric researcher SMQKE has drawn attention to an often-overlooked functional characteristic of XRP, emphasizing its role beyond a tradable asset. To activate an account on the XRP Ledger and participate in the distributed currency exchange, users must hold XRP in reserve, open a trust line, and issue offers.
Competing Interests in the XRP Ecosystem
The passage highlights the competing interests among various user groups within the system. LETS (Local Exchange Trading Systems) supporters prefer XRP to be inexpensive to minimize the cost of opening trust lines and conducting transactions. Traders benefit from price volatility, creating arbitrage opportunities, while payment providers seek price stability.
Ripple’s Escrow Strategy and Shifting User Base
Ripple's strategy in 2017 involved locking 55 billion XRP into a cryptographically secured escrow account with a mechanism to release only 1 billion XRP per month, aiming to assure market participants of predictable and controlled XRP supply.
Thus, XRP serves not only as a trading tool but also as an essential element of the XRP Ledger’s infrastructure, offering new perspectives on its role in the ecosystem.
