Emily Walker
In a recent post on X, Justin Bons, the Founder and Chief Investment Officer of Cyber Capital, Europe’s oldest cryptocurrency fund, claims that the XRP Ledger (XRPL) operates in a centralized and permissioned manner, contradicting assertions made by Ripple executives. He also criticizes the XRP Foundation for allegedly misrepresenting the network’s level of decentralization and maintaining strict control over it.
The Centralization Argument for XRP
Bons emphasizes, “Ripple is centralized and permissioned, which goes against what its executives assert. The XRP community is being misled about its decentralization, and the foundation exercises complete control over the network. Promoting it as decentralized is tantamount to fraud!”
At the heart of Bons’s argument is the claim that the consensus mechanism depends on Unique Node Lists (UNLs), which are centralized lists of trusted nodes managed by specific entities, including the XRP Foundation. He argues that this is akin to a Proof of Authority (PoA) system, contrasting with decentralized methods like Proof of Stake (PoS) or Proof of Work (PoW). “The consensus for XRP is based on UNLs […] It follows a PoA structure instead of PoS or PoW, yet they claim it’s more decentralized than BTC and ETH,” he explains.
While Bons acknowledges that users can change their own UNLs and select trusted nodes, he argues that this does not create a truly trustless environment—a key trait of genuine decentralized cryptocurrencies. “The distinction here is subtle yet crucial. Truly decentralized systems are ‘trustless’, meaning no trust is required. Choosing whom to trust differs from being trustless!” he asserts.
Furthermore, Bons notes that if a user’s UNL does not overlap sufficiently (90% is needed) with the broader network, they risk being disconnected. “If your UNL doesn’t significantly overlap with the network, you risk exclusion! Their documentation states a 90% overlap is needed to avoid forking; resistance is futile!” he adds.
He argues that, in practice, the XRP Foundation must grant permission for participation in consensus. “In essence, you need direct approval from the XRP Foundation to take part in consensus-making—this indicates a high level of centralization in blockchain design,” Bons states.
Going further, he notes that for an extended period, there was only one default UNL, designated as the dUNL, which is hosted by the XRP Foundation and hardcoded as the default. “We’ve established that UNLs are essentially trusted intermediaries selected by the XRP Foundation. Historically, there was merely one UNL—the dUNL—which the foundation hosted and hardcoded as default,” he clarifies.
Bons criticizes the ability of the foundation to modify these validator lists at any time, facilitated by a web address they control. “They can instantly alter the validator list without warning in a completely centralized manner, excluding anyone that opposes them,” he contends.
Over time, two additional “official” UNL lists emerged, though one, Coil, is no longer operational, leaving only the dUNL and the XRPLF lists, both financed by the XRP Foundation. “This further consolidates control over the network,” he points out.
Bons argues that the absence of incentives, similar to block rewards in PoW or PoS systems, hampers the coordination of disparate parties without trust. “Blockchains enable untrusting parties to work together, thanks to the incentive mechanism (PoS or PoW) in place—however, XRP lacks block rewards and operates solely on trust,” he elaborates.
According to Bons, the inability for new UNLs to coordinate reinforces the foundation’s complete control. “If new UNLs can’t cooperate, it means the foundation effectively wields total control. This is a hallmark of a permissioned blockchain federation; granting universities and companies the ability to operate nodes exemplifies this!” he asserts.
Upon further inspection, Bons found that all UNLs are nearly identical, sharing the same validator sets. “A closer look reveals that all UNLs share identical validator sets, further demonstrating that the foundation effectively governs the network!” he states.
“This shows that new UNLs cannot collaborate, forcing the foundation’s list to become the de facto standard. All UNLs must adhere to it or face the risk of being forked off!” he adds.
Bons expresses concern about the implications of this level of control and its potential for censorship. “This level of control enables the foundation to implement censorship if pressured. Such a concentration of power is fundamentally different from how cryptocurrencies are intended to function. It explains why only 20% of validators can halt the network,” he warns.
Moreover, he emphasizes that running a trusted validator does not yield rewards, unlike PoW or PoS models where validators earn incentives. “There are no rewards associated with being a trusted validator. Unlike PoW or PoS systems, where the cost of an attack parallels the block rewards for incentivizing miners/stakers. This demonstrates how decentralization is closely linked to reward systems. In XRP, the measure of decentralization is essentially zero!” he remarks.
Reflecting on his extensive research, Bons points out, “I have analyzed XRP since its inception. The trade-off in decentralization was acknowledged in its early days. This has changed progressively as both the community and leadership intensified their claims. I aim to empower investors, not belittle them.”
Bons highlights the initial distribution of XRP, noting a “shocking pre-mine of 99.8%,” labeling it as “one of the most unfair distributions ever.” He stresses that since no new XRP is created, any additional circulating XRP must be purchased from the founders. “This adds to the unfair distribution claim since all new circulating XRP must be acquired from the founders!” he states.
Bons proposes that the way forward involves integrating a Proof of Stake mechanism to replace the UNL system, thereby transforming XRP into a more standard decentralized blockchain. “Pretending XRP is permissionless is not a viable solution. The real fix lies in incorporating PoS to replace the UNL list, shifting XRP towards a more traditional decentralized blockchain,” he proposes.
He concludes his discussion with a challenge for the XRP community: “If you genuinely care about XRP, take this seriously. Within this critique lie pathways for improvement—either through genuine centralization or true decentralization. The truth will liberate us; act or push for change; nothing is beyond redemption.”
The community reacted swiftly with strong emotions. Panos Mekras, Co-founder of Anodos Finance, responded via X: “You’re just embarrassing yourself publicly. Ripple is a private company, XRP existed before Ripple. The XRP Ledger has decentralization with hundreds of validators and nodes worldwide, where >80% validator agreement is necessary for control, and no single validator exceeds 2% control. These are facts. Either accept them or remain a delusional hater. Don’t be a flat-earther.”
Another community member, identified as Krippenreiter (@krippenreiter), added: “Ripple is a company, my dear friend. Try again.” Ripple Labs or its founders have yet to respond.
As of the latest updates, XRP is trading at $2.55.