In 2022, as the dust around the phenomena of non-fungible tokens (NFTs) settles, it is becoming obvious that this concept is here to stay. Meanwhile, the majority of NFTs are still issued on a single blockchain: Ethereum (ETH) or EVM-compatible blockchains Polygon Network (MATIC), BNB Chain (BSC) and so on.
XRP Ledger, one of the oldest and most popular blockchains globally, is almost ready to challenge Ethereum (ETH) supremacy in the NFT segment.
NFTs on XRP Ledger: Introducing XLS-20
In 2022, Ripple developers are betting big on NFT functionality: the proposal designed to implement native NFT support to XRP Ledger is ready for the approval of XRPL validators. Also, Ripple exploded into the NFTs segment with its $250 million fund focused on support for NFT-centric products.
As such, XRPL is on the verge of its first major updates in years, i.e., the implementation of the XLS-20 proposal. What do we know so far?
- XRP Ledger promotes itself as a pioneer of the tokenization concept;
- In May 2021, a proposal to activate native NFT functionality (XLS-20 or XLS-20d) was published by Ripple’s software engineer Nik Bougalis;
- It is proposed to implement two new objects and one new ledger structure into the XRP Ledger design;
- In January 2022, Ripple engineers released a purpose-made devnet for NFT research; Ripple has already released XRPL software with NFT support;
- An NFT-centric fund with $250 million in funding is live, while the first celebrity endorsement collaborations have been inked. As such, XRP Ledger has never been as close to native NFT support as in early Q3, 2022.
What are NFTs?
Non-fungible tokens, or NFTs, are digital assets (blockchain-based tokens or cryptocurrencies) designed to verify the ownership of this or that content (picture, video, text and so on). “Non-fungible” means that unlike Bitcoin, Ethereum or other “fungible cryptocurrencies,” every non-fungible token is a unique one and cannot be replaced by an equivalent.
NFTs became popular in 2017-2018 with the inception of the Crypto Kitties game. But its mainstream adoption made headlines in 2021: prices for top-tier digital art objects tokenized as NFTs spiked to eight-digit waters. The Bored Ape Yacht Club (BAYC) collection – tokenized avatars of fictional apes – became a symbol of this craze.
The ongoing NFT euphoria was catalyzed by celebrities and brands: almost every big name in the entertainment industry created his/her own NFT collection or released a video/album/series in the form of digital tokens.
What is XRP Ledger?
XRP Ledger, or XRPL, is a decentralized distributed ledger system (blockchain) launched in 2012 by David Schwartz, Jed McCaleb and Arthur Britto. XRPL blockchain is underpinned by XRP, its core native token.
In late 2012, three key figureheads of XRP Ledger, together with Chris Larsen, co-founded Ripple Inc., a digital payments operator. XRPL founders transferred 80 billion XRP tokens to Ripple in order to facilitate addressing various use cases.
XRP Ledger leverages the Consensus validation method; a distributed ecosystem of validators is responsible for the integrity of the blockchain and reliable transaction confirmation.
XRP Ledger achieved 3-5 second transaction latency. In 2020-2022, XRP Ledger engineers worked on the adoption of smart contracts, so called “Hooks.” “Hooks” have basic smart contract functionality that makes XRP Ledger suitable for some decentralized finance protocols.
NFTs on XRP Ledger: New opportunities for veteran blockchain
Since 2012, XRP Ledger was known as a pioneer of “tokenization,” i.e., creating on-chain entities associated with this or that off-chain object. That is why XRP Ledger and Ripple are betting big on NFTs in 2022.
The first steps in the activation of native NFT functionality on XRP Ledger were made in Q1, 2021, when Mr. Wietse Wind of XRPL Labs software development studio proposed XLS-14d, the first-ever dedicated proposal for NFTs on XRP Ledger.
Initially, XRP Ledger’s NFTs were supposed to be “indivisible XRP IoUs,” i.e., XRPL-based tokens that cannot be split up. Unlike Ethereum’s NFTs (that can be traded, exchanged, transferred and stored), XRPL designed required users to “opt in ” to receive a token by explicitly signing a transaction.
This design came with too many limitations. As such, Ripple Labs’ Nik Bougalis released, on May 24, 2021, the XLS-20d proposal to replace XLS-14d as it depreciated. XLS-20d’s NFTs are more “generalized,” i.e., they work not unlike NFTs on major programmatic blockchains.
In May 2022, this proposal was “extended” by XLS-29d: XRPL enthusiasts proposed to reconsider the transactional logic of NFTs to remove the possibility of “spam” transactions.
As per the proposal by Mr. Bougalis – which is the key design document for XRPL-based NFTs so far – XRP Ledger codebase will receive two new objects and one new ledger structure.
Image by XRPL.org An NFToken is an object that describes a new non-fungible token; an NFTokenOffer is an object associated with the offer to buy/sell a single non-fungible token.
Also, NFTokenPage is a ledger structure that displays all NFTs stored by the same XRP Ledger account. Additionally, NFTokenMint and NFTokenBurn types of transactions will be added to allow XRP Ledger to support the minting and burning of non-fungible tokens. NFTokenCancelOffer transaction cancels the authorization of NFT creation while, with NFTokenOfferAccept transaction, an XRPL account accepts the transfer of non-fungible tokens (NFTs).
The XLS-29d proposal suggests that NftToken itself should contain information about whether this or that NFT is for sale. As such, the implementation of native NFT support involves minor changes to the XRP Ledger codebase.
XRP Ledger developers and Ripple have already announced a number of initiatives designed to catalyze the growth of XRPL’s NFT ecosystem.
In March 2022, Ripple launched Ripple’s Creator Fund, a $250 million initiative designed to support digital artists interested in NFT deployment to XRP Ledger.
Every team can apply for a grant and create an NFT collection or marketplace on XRP Ledger. Image by Ripple Ripple’s Creator Fund has already partnered with Mintable, Ethernity, MomentoNFT and NFT Pro, well-known projects in the NFT segment.
Recently, Ripple partnered with British luxury car creator Lotus and NBA star Michael Jordan; they will release their inaugural NFT collections on XRP Ledger.
In early July 2022, Ripple’s general manager, Monica Long, announced that the XLS-20d proposal is waiting for the approval of XRPL validators. As such, we can recall the most crucial milestones in NFT implementation by XRP Ledger:
2012 – XRP Ledger launches as protocol focused on “tokenization”;
Feb. 26, 2021 – XLS-14d proposal released by Wietse Wind as first concept of NFT on XRP Ledger;
May 24, 2021 – XLS-20d proposal published by Nik Bougalis; this concept fuels NFT progress on XRP Ledger thus far;
Jan. 11, 2022 – NFT-Devnet with XLS-20d activated launched by RippleX;
Apr. 11, 2022 – XRP Ledger software v1.9.0 with XLS-20 support released;
March 2022 – Ripple’s Creator Fund starts accepting applications from NFT developers; May 12, 2022 – XLS-29d proposal published to advance XRP Ledger logic;
Q1-Q2, 2022 – Major ecosystem partnerships inked for NFT adoption on XRP Ledger;
July 2022 – XLS-20 proposal reviewed by validators: Ripple’s Monica Long.
All in all, XRP Ledger can get its native NFT functionality as soon as in the coming weeks. Its XLS-20 proposal conceptualized the XRP Ledger’s approach to tokenization in the NFT era.
To implement native NFTs, XRP Ledger code should undergo minor changes. Prior to the release of NFTs, Ripple launched a $250 million ecosystem fund for digital artists and developers.
The activation of NFTs will be the most important update for Ripple and XRP Ledger in years.