XRP & XRPL Glossary: Every Term You Need to Know

Core concepts

XRP

The native digital asset of the XRP Ledger. XRP is used to pay transaction fees, serve as a bridge currency in cross-currency payments, and meet account reserve requirements. All 100 billion XRP were created at the ledger's launch in 2012 — no new XRP can be mined or minted. Transaction fees paid in XRP are permanently destroyed (burned), making XRP slightly deflationary over time.

XRP Ledger (XRPL)

The decentralized, open-source blockchain that XRP runs on. Launched in June 2012, the XRPL processes transactions in 3-5 seconds and can handle approximately 1,500 transactions per second. It does not use proof-of-work mining. Instead, it uses the XRP Ledger Consensus Protocol.

Ripple (the company)

Ripple Labs Inc. is a privately held fintech company headquartered in San Francisco. Ripple builds enterprise payment products (like RippleNet and On-Demand Liquidity) that use the XRP Ledger. Ripple is the largest holder of XRP but does not own or control the XRP Ledger. The XRPL is maintained by an independent, decentralized network of validators.

RippleNet

Ripple's enterprise payment network for banks and financial institutions. RippleNet connects payment providers, banks, and digital asset exchanges to provide a unified experience for sending money globally. It includes products like On-Demand Liquidity (ODL) that use XRP as a bridge asset.

How the ledger works

XRP Ledger Consensus Protocol

The mechanism the XRPL uses to agree on which transactions are valid. Instead of mining, a network of independent validators proposes and votes on transaction sets. When 80% or more of trusted validators agree, the transaction set is confirmed and written to the ledger. A new ledger closes every 3-5 seconds. This protocol consumes negligible energy compared to proof-of-work systems like Bitcoin.

Validator

A server that participates in the XRPL consensus process. Validators propose transactions, vote on their validity, and help close each ledger. Anyone can run a validator — there is no staking requirement. Validators are run by universities (like MIT, Keio University), exchanges (Bitso, Bitstamp), companies (Ripple, Coil), and independent operators worldwide.

Unique Node List (UNL)

A list of validators that a given XRPL server trusts to participate in consensus. Each server operator chooses their own UNL. The XRP Ledger Foundation and Ripple each publish a recommended default UNL, but operators can override this. A transaction is confirmed when 80% or more of the UNL validators agree on it.

Ledger (as a noun)

A snapshot of the state of all accounts, balances, and objects on the XRPL at a specific point in time. A new ledger version is created every 3-5 seconds. Each ledger is sequentially numbered (the "ledger index") and contains a set of validated transactions, the resulting state data, and a cryptographic hash linking it to the previous ledger.

Transaction

An instruction submitted to the XRPL to change the ledger state. Examples include sending XRP (Payment), creating a DEX order (OfferCreate), setting up an escrow (EscrowCreate), or minting an NFT (NFTokenMint). Every transaction requires a small fee paid in XRP, which is burned.

Transaction Cost (Fee)

A small amount of XRP destroyed with every transaction. The standard fee is 0.00001 XRP (10 drops). During periods of high network load, the fee can increase dynamically. The fee exists to prevent spam — not to reward validators. Since fees are destroyed, they reduce the total XRP supply over time.

Drops

The smallest unit of XRP. 1 XRP = 1,000,000 drops. The standard transaction fee is 10 drops (0.00001 XRP). All XRP amounts on the ledger are stored and transmitted in drops.

Amendment

A change to the XRPL protocol rules. Amendments are proposed by developers and activated only when 80% or more of trusted validators vote in favor for two consecutive weeks. This ensures no single entity can unilaterally change the protocol. Once activated, an amendment is permanent and cannot be rolled back. Examples include the AMM amendment (XLS-30), NFToken support (XLS-20), and Multi-Purpose Tokens.

Accounts & wallets

Account

An identity on the XRPL, identified by a classic address (starts with "r", e.g., rN7n3473SaZBCG4dFL83w7p1W9cgPB2Lq4) or an X-address. An account can hold XRP, issue tokens, create DEX offers, and own objects like escrows, trust lines, and NFTs. Accounts must meet the base reserve requirement to exist on the ledger.

Base Reserve

The minimum amount of XRP an account must hold to exist on the XRPL. As of December 2024, the base reserve is 1 XRP (reduced from 10 XRP). This XRP cannot be spent while the account is active. The reserve prevents spam by making it costly to create millions of empty accounts.

Owner Reserve

Additional XRP that must be held for each object an account owns on the ledger (trust lines, DEX offers, escrows, etc.). As of December 2024, the owner reserve is 0.2 XRP per object (reduced from 2 XRP). Example: an account with 5 trust lines needs 1 XRP (base) + 5 × 0.2 XRP (owner) = 2 XRP total reserve.

Secret Key (Private Key)

A cryptographic key that proves ownership of an XRPL account and authorizes transactions. If someone has your secret key, they control your account. Never share it. Store it offline. The XRPL supports Ed25519 and secp256k1 cryptographic algorithms for key pairs.

Destination Tag

A numeric identifier attached to an XRP payment that tells the recipient which user or account the payment is for. Exchanges use destination tags to route incoming deposits to the correct customer account. Sending XRP to an exchange without the correct destination tag can result in lost funds.

X-address

A format that combines a classic XRPL address and destination tag into a single string (starts with "X" on mainnet or "T" on testnet). X-addresses reduce errors by eliminating the need to enter the destination tag separately. Example: X7RcnTg3DSkvfox7cDcaVQQbuiVrPq4r4PScLMWGkMb1CS2.

Tokens & assets

Trust Line

A link between two XRPL accounts that allows one to hold tokens issued by the other. You must explicitly create a trust line to hold any non-XRP token. This prevents others from sending you unwanted tokens. Trust lines track the balance, credit limit, and settings (like whether the token can be frozen). Each trust line increases your owner reserve by 0.2 XRP.

Issued Currency (IOU)

Any token on the XRPL that is not XRP. Issued currencies are created through trust lines and can represent anything: fiat currencies, stablecoins, commodities, loyalty points, or other assets. They are sometimes called "IOUs" because holding a token means trusting that the issuer will honor its value. RLUSD (Ripple's USD stablecoin) is an example of an issued currency.

RLUSD

Ripple USD — a stablecoin issued by Ripple, pegged 1:1 to the US dollar. RLUSD exists on both the XRP Ledger and Ethereum. It is backed by US dollar deposits, US government bonds, and cash equivalents. RLUSD launched in December 2024 and has been adopted as a liquidity vehicle for institutional cross-border payments.

Multi-Purpose Token (MPT)

A newer fungible token standard on the XRPL, activated in October 2025. MPTs are designed to be more efficient than trust line tokens and include built-in features for institutional use cases: on-chain metadata, transfer restrictions (non-transferable tokens), issuer authorization requirements, and DEX trading controls. MPTs can represent financial instruments, carbon credits, real estate, or fractional ownership of assets. They are sometimes described as "semi-fungible" because their metadata can distinguish between different classes of the same token.

NFToken (XLS-20)

The native non-fungible token standard on the XRPL, enabled by the XLS-20 amendment. NFTs on the XRPL can be minted, transferred, burned, and traded without smart contracts — the functionality is built directly into the ledger protocol. The XRPL supports NFT royalties (up to 50%), transfer fees, and on-ledger offers (buy/sell).

Freeze

A power available to token issuers (not applicable to XRP itself). An issuer can freeze a specific trust line or all trust lines for their issued currency. This is used by regulated issuers (like stablecoin providers) for compliance. XRP can never be frozen — only issued currencies can. There is also a "No Freeze" setting an issuer can enable to permanently give up the ability to freeze.

Trading & the DEX

Decentralized Exchange (DEX)

A built-in exchange on the XRPL where users can trade XRP and issued currencies directly on the ledger, without an intermediary. The DEX has two components: a central limit order book (CLOB) and an automated market maker (AMM). It has been operational since the XRPL launched in 2012, making it one of the oldest DEXs in crypto.

Order Book (CLOB)

The original trading mechanism on the XRPL DEX. Users submit Offers (buy or sell orders) at specific prices. When a new offer matches an existing one, the trade executes automatically on-ledger. The order book operates as a central limit order book (CLOB) — offers are matched by price priority.

Offer

An order to buy or sell a token on the XRPL DEX. Created with the OfferCreate transaction type. An offer specifies the amount you want to pay and the amount you want to receive. Offers can be partially filled. Unfilled or partially filled offers remain on the order book until they are consumed, cancelled, or expire.

Auto-Bridging

A feature of the XRPL DEX that automatically routes trades through XRP when it produces a better rate. For example, if you want to trade EUR for USD, the DEX will check if EUR→XRP→USD gives a better price than a direct EUR/USD trade, and automatically use the better path. This increases liquidity for all trading pairs.

AMM (Automated Market Maker)

Added to the XRPL via the XLS-30 amendment. An AMM is a liquidity pool that uses a mathematical formula to set token prices instead of an order book. Anyone can deposit two tokens into an AMM pool and receive LP Tokens representing their share of the pool. The XRPL allows one AMM per token pair. AMM pools and the order book operate side by side — the DEX automatically routes trades to whichever gives the better price.

LP Token

A token issued by an AMM pool to liquidity providers. LP Tokens represent your proportional share of the two assets in the pool. You can redeem LP Tokens at any time to withdraw your share of the pool's assets plus any fees earned. LP Token holders can also vote on the AMM's trading fee.

Spread

The difference between the best buy price (ask) and best sell price (bid) for an asset. A tighter spread means lower trading costs. On the XRPL DEX, spreads are determined by the liquidity in the order book and AMM pools. On centralized exchanges, spreads vary based on the exchange's trading volume and market maker activity.

Bid / Ask

The bid is the highest price a buyer is willing to pay. The ask is the lowest price a seller will accept. The gap between them is the spread. When you "buy" XRP on an exchange, you pay the ask price. When you "sell," you receive the bid price.

Slippage

The difference between the expected price of a trade and the actual price you get. Slippage occurs when there isn't enough liquidity at the quoted price, so your order fills at progressively worse prices. Larger orders and thinner markets lead to more slippage.

Payments & transfers

Cross-Currency Payment

A payment on the XRPL where the sender pays in one currency and the recipient receives a different one. The XRPL automatically finds the cheapest conversion path through the DEX. For example, you can send EUR and the recipient receives JPY, with the ledger handling the conversion in a single atomic transaction.

Pathfinding

The process by which the XRPL finds the cheapest route for a cross-currency payment. The ledger evaluates multiple possible paths through different order books and AMM pools, selecting the one that delivers the most value to the recipient. This happens automatically and is invisible to the user.

On-Demand Liquidity (ODL)

A Ripple product (formerly called xRapid) that uses XRP as a bridge asset for cross-border payments. A sender's fiat currency is converted to XRP, sent across borders in seconds, then converted to the recipient's local fiat currency. This eliminates the need for pre-funded accounts in destination countries (nostro/vostro accounts).

Escrow

A built-in XRPL feature that locks XRP (or, since 2025, issued tokens) and releases it only when specific conditions are met. Conditions can be time-based (release after a certain date), crypto-condition-based (release when a cryptographic proof is provided), or both. Ripple uses escrow to lock its XRP holdings — releasing 1 billion XRP per month, with unused portions returned to escrow.

Payment Channel

A feature for high-throughput, off-ledger XRP transfers between two parties. A channel is opened with a single on-ledger transaction, then the sender can issue thousands of signed payment claims off-ledger. Only the final settlement is written to the ledger. Useful for micropayments, streaming payments, and high-frequency transfers.

Checks

Similar to paper cheques. A Check on the XRPL is a deferred payment — the sender creates it, and the recipient can cash it later for up to the specified amount. If the sender doesn't have sufficient funds when the Check is cashed, it bounces. Checks can have expiration dates.

Advanced features

Hooks (Xahau)

Small, efficient programs written in WebAssembly (WASM) that attach to an XRPL account and execute automatically when certain transactions occur. Hooks are the XRPL ecosystem's approach to smart contract functionality. As of 2025, Hooks are live on Xahau (an XRPL sidechain) but not on the XRPL mainnet. They operate at the protocol's base layer, making them faster and more tightly integrated than EVM-style smart contracts.

Xahau

A sidechain forked from the XRPL codebase that adds Hooks (smart contract) functionality. Xahau inherits the XRPL's speed and efficiency while enabling programmable logic on accounts. It serves as an innovation sandbox for features that may eventually be proposed for the XRPL mainnet.

XRPL EVM Sidechain

A sidechain that launched on mainnet in June 2025, bringing full Ethereum Virtual Machine (EVM) compatibility to the XRP ecosystem. Developers can deploy Solidity smart contracts (originally built for Ethereum) on the XRPL EVM Sidechain. It uses XRP as its native gas token, a Proof of Authority (PoA) consensus model, and is built on the Cosmos SDK. The Axelar bridge connects it to the XRPL mainnet with a 1:1 XRP peg.

Smart Escrows (Extensions)

An upcoming XRPL feature (targeted for 2026) that allows developers to write custom release conditions for escrows. Smart Escrows are the first "Extension" — a new primitive that lets code attach to existing XRPL features without requiring a full smart contract runtime. This brings limited programmability to the mainnet while preserving its performance characteristics.

Decentralized Identifier (DID)

A digital identity standard (W3C-compliant) built into the XRPL. DIDs allow users to create self-sovereign identities tied to their XRPL account, without relying on a centralized authority. Activated in October 2024, DIDs enable verifiable credentials and can be used for KYC, access control, and reputation systems on the ledger.

PermissionedDEX

An amendment (under voting as of late 2025) that allows DEX operators to restrict participation to authorized accounts. This enables regulated trading venues on the XRPL where only KYC-verified users can trade, which is important for institutional adoption and compliance with securities regulations.

Confidential Tokens (Upcoming)

A proposed feature that adds privacy to Multi-Purpose Tokens using EC-ElGamal encryption and zero-knowledge proofs. Balances and transfer amounts are encrypted but still auditable by issuers and designated auditors. Targeted for 2026, this is designed for institutional use cases where transaction privacy is required by regulation.

Infrastructure & network

rippled

The reference server software that powers the XRP Ledger. Written in C++, rippled is the program that validators and full-history nodes run. It handles transaction processing, consensus participation, and API access. It is open source and maintained by the XRPL community and Ripple engineers.

Clio

An XRPL server optimized for API lookups and historical data queries. Clio extracts and stores data from rippled in a more efficient format, reducing the load on validator nodes. If you're building an app that reads XRPL data (account balances, transaction history), you'd typically query a Clio server.

Mainnet

The live, production XRP Ledger where real XRP has real value. All actual transactions occur on mainnet. Distinguished from testnet and devnet, which use worthless test XRP for development.

Testnet / Devnet

Testing networks that mirror the XRPL mainnet but use XRP with no real value. Developers use testnet and devnet to test applications and transactions without risking real funds. Test XRP is free and can be obtained from a faucet.

Faucet

A service that dispenses free test XRP for use on testnet or devnet. Developers use faucets to fund test accounts while building and testing XRPL applications.

Market & trading terms

Market Cap (Market Capitalization)

The total value of all XRP in circulation. Calculated as: current XRP price × circulating supply. Market cap is used to rank cryptocurrencies by size. XRP has historically been among the top 5-10 cryptocurrencies by market cap.

Circulating Supply

The amount of XRP currently available in the market. Not all 100 billion XRP are circulating — a significant portion is held in Ripple's escrow accounts. As of early 2026, approximately 61 billion XRP are in circulation.

All-Time High (ATH)

The highest price XRP has ever reached. XRP's ATH was approximately $3.84 USD in January 2018. ATH is commonly referenced as a benchmark for price recovery or growth potential.

KYC (Know Your Customer)

Identity verification required by regulated exchanges before you can buy or sell XRP. Typically involves uploading a government-issued ID (passport, driver's license) and proof of address. KYC is a legal requirement in most countries and helps prevent money laundering and fraud.

Maker / Taker Fees

Trading fees charged by exchanges. A "maker" adds liquidity by placing a limit order that doesn't fill immediately. A "taker" removes liquidity by placing a market order or a limit order that fills immediately. Maker fees are usually lower than taker fees to incentivize liquidity. Common range: 0.1%-0.5% per trade.

DCA (Dollar-Cost Averaging)

An investment strategy where you buy a fixed dollar amount of XRP at regular intervals (daily, weekly, monthly) regardless of price. DCA reduces the impact of short-term volatility by averaging your purchase price over time. Many exchanges offer automated recurring buy features for this.

Cold Wallet / Hot Wallet

A cold wallet stores your XRP offline (hardware wallet, paper wallet) — maximum security, not connected to the internet. A hot wallet is a software wallet connected to the internet — more convenient for frequent transactions but more vulnerable to hacking. Best practice: keep large holdings in a cold wallet, small amounts in a hot wallet for daily use.