XRPL Makes New Proposal To Allow Issued Tokens To Be Used In Payment ChannelsApril 13, 2022 4:07 pm
On the XRPL twitter, it was just revealed that a new proposal was created that would allow for issued tokens to be used in the payment channels of the XRP Ledger in a similar way to the native XRP token.
The ledger currently supports a variety of different instruments that are not limited to just payment, but also includes things like escrows and checks.
To give some detail in terms of how escrows work on the XRP Ledger, XRP is essentially locked up within an escrow account and the XRP stays locked in that account until the escrows conditions are satisfied which terminates the escrow.
And of course, payment channels are the most common use case to facilitate on-chain transactions and allows for quick settlement.
The key thing so far is that XRP is the token that is able to take advantage of these unique features of the XRP Ledger so the ability to expand these capabilities for more than the native asset XRP is an interesting proposal.
XRP Ledger Standard Proposal:
"Token-Enabled Escrows and Payment Channels"
— XRPL Labs (@XRPLLabs) April 12, 2022
However, these payment channels and escrows support only the native asset, XRP. This limitation is a barrier to wider-spread use of escrows and payment channels for a variety of reasons, including regulatory compliance, a reluctance to keep a counter-party-free asset (i.e., XRP), exchange-rate risk and volatility.
According to a Github release, this XLS proposes to introduce an amendment to the XRPL protocol which has the following goals: to allow escrows and payment channels to use issued tokens or fungible tokens.
It aims to also allow issuers to retain freeze and authorization control over their issued currencies even when they are locked into instruments.
As previously covered by U.Today, RippleNet GM Asheesh Birla recently took to Twitter to clarify some ”misconceptions” about Ripple’s ODL in the wake of Strike’s Shopify integration.
Ripple’s strategy has been touched on by its executives which have mentioned in the past that Ripple’s On-Demand Liquidity (ODL) is going to be a key component in order for Ripple to achieve global coverage.
So far, the company has around 20 ODL markets that are currently operating and is looking to expand that number even more.
Essentially, the ODL solution will allow Ripple to move money across international borders at any time without any prefunded accounts which would basically disrupt the entire traditional financial networks that are in use today by institutions.
XRP and other issued tokens would obviously play a key part in the ODL solution in order to achieve the liquidity that we are looking for in such a solution.
— BrutalHustler.XRP (@Xplashio) April 13, 2022
Github.com reveals details of this proposal:
The amendment has the following goals:
- Allow Escrows to use Trustline balances (aka Fungible Tokens).
- Allow Payment Channels to use Trustline balances.
- Allow Issuers to retain freeze and authorization control over their Issued currencies even when they are locked into Instruments.
- Avoid unnecessary multiplication of on-ledger entities.
- Avoid unnecessarily burdening the ledger computationally.
Making amendments to the XRPL protocol is a pretty defined process that expands the scope of the XRPL network and is done to continually refine the strategy of Ripple & XRP.
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