Founder Of Europe’s Oldest Crypto Fund

In a post on X, Justin Bons, Founder and Chief Investment Officer of Cyber Capital—Europe’s oldest cryptocurrency fund—asserts that the XRP Ledger (XRPL) is centralized and permissioned, contradicting claims made by Ripple executives. Bons also accuses the XRP Foundation of misleading investors about the network’s decentralization and exerting total control over it.

Here’s Why XRP Is Centralized

“Ripple is centralized & permissioned, contrary to the claims made by its executives. XRP is misleading investors by lying about its decentralization. The foundation has total control over the network! Attracting retail buyers with such false claims is straight-up fraud!” Bons declares.

Central to Bons’s argument is the assertion that the consensus mechanism relies on Unique Node Lists (UNLs), which are centralized lists of trusted nodes issued by single entities, including the XRP Foundation. He explained that this setup aligns more with a Proof of Authority (PoA) system rather than decentralized consensus mechanisms like Proof of Stake (PoS) or Proof of Work (PoW). “XRPs consensus is based on UNLs […] XRP is not based on PoS or PoW, but PoA (Proof of Authority). Yet they claim to be more decentralized than BTC & ETH,” he notes.

Bons emphasizes that while users can modify their own UNLs and choose whom to trust, this does not equate to a trustless system—a fundamental characteristic of truly decentralized cryptocurrencies. “The nuance in the language here is subtle but immensely important. Truly decentralized cryptocurrencies are ‘trustless’, in that ZERO ‘trust’ is required. Choosing who to trust is not the same as trustlessness!” he argues.

He further points out that if there is insufficient overlap between a user’s UNL and the rest of the network—a 90% overlap is required to prevent forking—the user risks being disconnected. “If there is insufficient overlap between your UNL & the rest of the network; you will get kicked off! According to their own docs; a 90% overlap is required to prevent forking; resistance is futile!” Bons states.

Bons contends that, in practice, direct permission from the XRP Foundation is necessary to participate in consensus. “This means that in practice; Direct permission is required from the XRP foundation to participate in consensus. That is about as centralized as it gets when it comes to blockchain design,” he adds.

Delving deeper, Bons noted that for a long time, there was only one UNL—the default UNL (dUNL)—which is hosted by the foundation and hardcoded as default. “We have determined that UNLs are trusted third parties ultimately chosen by the XRP foundation. This is reinforced as we dig deeper into these UNLs: For the longest time, there was only one UNL; the dUNL, which is hosted by the foundation, the dUNL is hardcoded as default,” he explains.

He criticizes the dynamic nature of these validator lists, which are based on a web address hosted by the XRP Foundation. “This means they can instantaneously change the validator list without a moment’s notice in a totally centralized fashion! Kicking out anyone who goes against the authority,” Bons claims.

Bons highlighted that over time, two more “official” UNL lists were added—though one, Coil, has since ceased operations—leaving the dUNL and the XRPLF lists, both directly funded by the XRP Foundation. “This adds another layer of de facto control over the network,” he says.

He argues that the lack of incentives, such as block rewards found in PoW or PoS systems, means disparate parties cannot coordinate effectively without trust. “Blockchains allow for disparate parties who do not trust each other to coordinate. All thanks to the underlying incentive mechanism (PoS or PoW)—yet, XRP has no block reward & no incentives; it is purely based on trust,” he explains.

Bons asserted that new UNLs cannot coordinate with each other due to the absence of these incentive mechanisms, resulting in the foundation having de facto total control. “Since if new UNLs cannot coordinate, it means the foundation has de facto total control. Control over validators equals control over the network! Giving permission to universities & companies to run nodes is precisely what a permissioned blockchain federation looks like!” he declares.

He further reveals that all the UNLs are actually identical, containing the same validator sets. “On closer inspection, all of the UNLs are actually identical to each other! With the same validator sets! Further proving that the foundation in practice has total control over the network!” Bons states.

“This proves that new UNLs cannot coordinate with each other! Thereby, forcing the foundation’s list to become the de facto list. As all UNLs have to comply or risk getting forked off!” he added.

Bons expresses concern that this level of control allows the foundation to carry out censorship if compelled to do so. “This also allows the foundation to carry out censorship if it were compelled to do so. As they have such a high degree of control! This is very different from how cryptocurrencies are supposed to work! Explaining why it only takes 20% of validators to halt the network.” he warns.

He also points out that there are no rewards for running a trusted validator, unlike in PoW or PoS models where validators are incentivized. “There are also no rewards for running a trusted validator. Unlike PoW or PoS, where the cost of attack mirrors block reward to miners/stakers. This is why the measure of decentralization is highly related to this reward. Over XRP, this measure of decentralization is zero!” he asserts.

Reflecting on his history, Bons said, “I have researched XRP since the early days. I distinctly remember the trade-off in decentralization was recognized. This has gradually shifted as the community & leadership became more extreme in their claims. I do not say this to belittle investors but to empower them!”

He highlights the coin’s initial distribution, noting a “shocking pre-mine of 99.8%,” which he described as “one of the most unfair distributions of all time.” Bons emphasized that since no new coins are created, all new circulating XRP is bought from the founders. “This makes it one of the most unfair distributions of all time. As no new XRP is created, all new circulating XRP is bought from the founders!” he states.

Bons proposed that the solution lies in adding a Proof of Stake mechanism to replace the UNL system, thereby transforming XRP into a more conventional decentralized blockchain. “Pretending XRP is permissionless is not the right answer. The real solution lies in adding PoS to replace the UNL list! Transforming XRP into a more conventional decentralized blockchain,” he suggests.

He concluded his thread with a call to action for the community: “If you truly care about XRP, take this very seriously. As within this critique lie solutions that can help XRP succeed; Either through honest centralization or decentralization. As the truth sets us free; leave or apply pressure for change; as nothing is beyond redemption.”

Reactions from the community were swift and filled with indignation. Panos Mekras, Co-founder of Anodos Finance, responded via X: “You are just embarrassing yourself publicly. Ripple is a private company, XRP exists before Ripple, the XRP Ledger is decentralized with hundreds of validators and nodes all over the world, >80% validator agreement is needed for control and no validator has more than 2% control. These are the facts. You either accept it or you are a delusional hater. Don’t be a flat-earther.”

Another community member, known as Krippenreiter (@krippenreiter), commented: “Ripple is a company my dear friend. Try again.” Ripple Labs or its founders have not yet commented.

At press time, XRP traded at $2.55.

Featured image created with DALL.E, chart from TradingView.com