Validators Depart As Ripple Dev Proposes Changes at XRP Ledger Foundation, Sparking Controversy

A Ripple developer has put out a proposal within the XRP Ledger (XRPL) ecosystem for a change in the membership and governance structure of the XRPL Foundation (XRPLF), leading to controversy and validator departures.

David Fuelling, Director of Software Engineering at RippleX, is advocating for significant changes to the governance structure of the XRP Ledger Foundation. The proposal sets out a plan to establish a community-led governance system.

The XRPL Foundation is a non-profit entity that supports the development of the XRPL ecosystem. However, Fuelling believes the entity lacks clarity regarding membership rights and responsibilities, prompting the call for well-defined rules.

In his proposal, Fuelling stressed the need for a better membership structure. The RippleX developer says there is an ambiguity around membership eligibility and Board of Directors elections. As a result, he seeks to introduce a new method for elections.

The key goals of the proposal include increasing representation for XRPL ecosystem members within the XRPLF, ensuring governance clarity, and fostering increased participation from interested stakeholders.

Proposed Membership and Board Changes

The proposed changes include the introduction of three membership classes: Individual Members, Corporate Members, and Sustaining Members. Each class has distinct eligibility criteria and membership rights, with yearly membership dues varying accordingly.

Notably, Individual Members would need to pay an annual fee of 75 XRP. For Corporate Members, companies with 1 to 10 employees could pay 500 XRP yearly, while larger companies would pay more, like 500,000 XRP. The Sustaining Member would pay the highest amount, about 1,000,000 XRP. 

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To appeal to the Individual, Corporate, and Sustaining Members, Fuelling proposes a diversified Board of Directors composition. The board would consist of a minimum of three Community Directors, one Corporate Director, and one Sustaining Director.

The proposal also outlines terms of office for directors, with Community Directors serving a two-year term, Corporate Directors serving a one-year term, and Sustaining Directors appointed by their respective sustaining members with no term limit.

XRPL Community Reacts

In reply to Fuelling’s post on the proposal, David Schwartz, Ripple’s CTO, commended Fuelling for clarifying the proposal to the public. Schwartz revealed that Fueling had privately shared the proposal with him and the XRPLF before taking it public.

According to the Ripple CTO, the reception from the XRPLF was favorable. However, he stressed that Fuelling needed no permission to make the proposal. Schwartz emphasized that the community is not obliged to take the proposal without changes, as it is all open for discussion.

Appreciate this public clarity from you, @sappenin. David also shared his proposal with me as a courtesy beforehand, as he did with XRPLF, and the Foundation was receptive to the proposal. At the end of the day though, he, like any other community member, doesn’t need…

— David “JoelKatz” Schwartz (@JoelKatz) January 29, 2024

Takeover by Ripple?

While Fuelling has also confirmed that the proposal is open to discussion, input, and proposed changes from the broader community, some individuals have not received it well. Notably, they believe the proposal is an attempt at a takeover from Ripple.

Onledger.net questioned several aspects of the proposal. One of these areas pertained to the Sustaining Member, which he believes could only be Ripple, seeing as it is likely the only firm capable of paying the 1 million XRP fee.

A few questions for you @sappenin that I’d like to ask

1. You said you had shared this document with Ripple employees also. Were any of those employees Monica Long, Brad Garlinghouse, David Schwartz or anyone from legal?

2. Did you make any changes to your proposal after […] https://t.co/lbN9ZYwvwc

— onledger.net (@offledger) January 28, 2024

The fact that the Sustaining Member has enough power to appoint a Sustaining Director that would sit on the board for an unlimited time has triggered concerns that the proposal could be an attempt for Ripple to assume this position. However, this remains speculative.

Departure of XRPL Validators

Amid this reception, some validators, such as Alloy Networks, have decided to depart the ecosystem, as first noted by XRP community figure Crypto Eri. She highlighted Alloy Networks’ significance to the ecosystem, as they are one of only three entities providing peering servers.

Alloy Networks refuted claims that its departure was not well thought out but a product of impulse driven by anger. The team stressed that if that were the case, they would immediately remove their Zaphod infrastructure instead of phasing it out. 

Further remarks from the team called on profit-making institutions leveraging the XRPL Ledger to also contribute to infrastructure. This comment has triggered speculation that the lack of incentives for infrastructure providers on the XRPL is a contributing factor to the departures.

Notably, unlike other blockchains, the XRPL has no direct incentives for validators and infrastructure providers.

ShortTheFomo, another infrastructure provider, disclosed plans to decommission two mainnet nodes under its control and phase out participation in the XRPL.

“No Incentive is the Best Incentive”

In her YouTube channel, Eri asserted that the idea of “no incentive is the best incentive,” which proposes that anyone providing infrastructure should do it out of love for the network and not financial gains, is not particularly working out well for the XRPL.

Eri agreed with Alloy Networks’ suggestion that businesses leveraging the XRPL should contribute to infrastructure provision. Replying to Eri, another RippleX developer, Mayukha Vadari, noted that this is one thing she likes about the proposal from Fuelling.

According to her, it would propel funding from different sources, and some of these sources would be businesses leveraging the XRPL. She noted that some of the funding could go into supporting infrastructure.

That’s actually one thing I liked about the proposal: funding can come from diverse sources, including from businesses running on the XRPL. If they want to have a say in whatever this organization is, they need to pay – and some of those funds could be used for infra.

— Mayukha Vadari (@msvadari) January 28, 2024

Reacting to the emerging issue, WrathofKahneman, another notable XRP community figure, suggested that the issues were a business problem and not a network problem. However, he admitted his lack of experience in the business area.