XRP & Blockchain Glossary
Essential terms and concepts for understanding XRP, the XRP Ledger, and blockchain technology.
From AMM to XRPL, master the vocabulary.
A
AMM (Automated Market Maker)
A decentralized exchange mechanism using liquidity pools instead of order books. XRPL's native AMM launched in 2024, allowing users to provide liquidity and earn fees.
Amendment
A proposed change to the XRPL protocol. Requires 80% validator support for two weeks before activating. Ensures changes have broad consensus.
B
Bridge Currency
A currency used to facilitate exchanges between two other currencies. XRP serves as a bridge currency in ODL, enabling instant conversion between fiat currencies.
Burn (Transaction Fee)
Every XRPL transaction destroys a tiny amount of XRP (currently ~0.00001 XRP). This deflationary mechanism slowly reduces total supply over time.
C
Consensus (XRPL)
XRPL's unique agreement mechanism where validators vote on transaction validity. Unlike proof-of-work, it requires no mining and settles transactions in 3-5 seconds.
Clawback
An XRPL feature allowing token issuers to recover tokens from holders. Important for regulatory compliance with stablecoins and security tokens.
Corridor
A payment route between two countries/currencies. ODL operates in specific corridors like US-Mexico, Japan-Philippines, where liquidity is available.
D
DEX (Decentralized Exchange)
XRPL has a built-in DEX since 2012—one of the first blockchain-native exchanges. Allows trustless trading of any XRPL-issued tokens.
Drops
The smallest unit of XRP. 1 XRP = 1,000,000 drops. Similar to Bitcoin's satoshis. Transaction fees are typically measured in drops.
E
Escrow
Native XRPL feature that locks XRP until conditions are met (time-based or cryptographic). Ripple uses escrow to release XRP from their holdings monthly.
ETF (Exchange-Traded Fund)
A regulated investment product traded on stock exchanges. XRP ETF applications are pending following the SEC case resolution. Would enable traditional investors to gain XRP exposure.
H
Hooks
Small, efficient programs that run on XRPL accounts. Similar to smart contracts but optimized for payments. Currently live on Xahau sidechain, proposed for mainnet.
Howey Test
US legal test determining if something is a security. The SEC vs Ripple case centered on whether XRP sales met this test. Judge Torres ruled programmatic sales did not.
N
Nostro/Vostro Accounts
Pre-funded accounts banks hold with each other for cross-border payments. Trillions of dollars sit idle in these accounts globally. ODL aims to eliminate this need.
NFT (XLS-20)
Native NFT support on XRPL launched in 2022. Unlike Ethereum NFTs, XRPL NFTs are protocol-level objects with built-in royalties and low minting costs.
O
ODL (On-Demand Liquidity)
Ripple's flagship product using XRP as a bridge currency for instant cross-border settlements. Now rebranded as "Ripple Payments." Eliminates need for pre-funded accounts.
R
Ripple (Company)
Enterprise blockchain company building payment solutions. Not to be confused with XRP (the asset) or XRPL (the ledger). Holds significant XRP in escrow.
RippleNet
Ripple's global payment network connecting banks and payment providers. Offers messaging, clearing, and settlement services. ODL is one product within RippleNet.
RLUSD
Ripple's USD stablecoin launched in 2024. 1:1 backed by USD and Treasuries. Available on XRPL and Ethereum. NYDFS regulated.
U
UNL (Unique Node List)
List of validators a node trusts. Validators on your UNL are the ones whose votes count for your version of consensus. Ripple and XRPL Foundation publish recommended UNLs.
V
Validator
Server that participates in XRPL consensus. Unlike miners, validators don't receive rewards—they run for network health. Currently ~150+ validators globally.
X
XRP
Native digital asset of the XRP Ledger. Used for transaction fees, as a bridge currency in ODL, and for anti-spam (reserve requirements). 100 billion created at genesis.
XRPL (XRP Ledger)
Decentralized, open-source blockchain launched in 2012. Features include native DEX, fast settlement (3-5 sec), low fees, and no mining. Operates independently of Ripple.
XLS (XRP Ledger Standards)
Proposed standards for XRPL features. Examples: XLS-20 (NFTs), XLS-30 (AMM). Community proposes, validators vote to activate via amendments.
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