Ripple Weighs Staking Overhaul to Expand XRP’s Role in DeFi

Ripple executives have begun openly discussing the possibility of introducing XRP to DeFi by enabling staking initiatives on its blockchain designed to align incentives among validators and token holders.

The idea was first floated by J. Ayo Akinyele, head of engineering at RippleX, an initiative that supports developers building on the XRP Ledger.

“When I think about how XRP’s utility could keep expanding alongside new capabilities, a question naturally comes up,” Akinyele wrote in a blog post on Wednesday.

Those include enabling the XRP Ledger to support native staking and whether that would be a net benefit for network design and the protocol’s native token.

Staking encourages “long-term participation and can strengthen security by rewarding those who help maintain consensus,” Akinyele added.

To make staking possible, there needs to be a “source of staking rewards” and “to distribute them fairly,” Akinyele said, explaining that it would require restructuring at the core levels.

Staking refers to the process of locking up specific crypto assets to help secure a given network and earn participants protocol-defined rewards.

Staking also usually involves redistributing transaction fees, which the XRPL currently burns, to keep the supply deflationary and help maintain network efficiency.

The XRP Ledger was initially designed for efficient global value transfer and liquidity, particularly for cross-border payments. The concept would help XRP maintain its edge following the adoption of XRP by digital asset treasuries and exchange-traded funds, according to Akinyele.

Introducing staking, however, would challenge the ledger’s core principles, such as the Proof of Association mechanism, which prioritizes trust and stability over financial incentives.

Despite those challenges, David Schwartz, Ripple’s CTO, floated two conceptual ideas for incorporating staking into XRPL in a subsequent tweet.

The first involves a two-layer consensus model with an incentivized inner layer. 

The dual-layer system would involve an “inner” layer of about 16 validators, selected by the “outer” layer based on stake. It would then handle ledger advancement through staking and slashing mechanisms to prevent issues such as double signing, Schwartz explained. 

The outer layer, which would involve the current validators without a staking component, would oversee amendments and fees and police the inner layer.

The second would retain the current consensus structure but use fees for zero-knowledge proofs. ZK proofs are a cryptographic way to prove a statement is true without sharing any extra details, allowing verification without trust.

While these ideas are “technically promising,” they are “not practical” any time soon due to the “complexity, effort, and risk,” Schwartz added, dialing back staking expectations. 

XRP is up 0.2% over 24 hours and is currently trading at $2.13, according to CoinGecko data.