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Introduction to XRP and XRP Ledger Yana Novikova, Director of Product Management Hot Chips, 2018

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Introduction to XRP and XRP Ledger

Yana Novikova, Director of Product Management

Hot Chips, 2018

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About Me

Yana Novikova

Director of Product Management at Ripple

4 years with Ripple in various roles, including product manager for XRP Ledger, and xRapid, RippleNet's liquidity solution that uses the digital asset, XRP.

MGVS6V5NPCFJPA4HRJ5UJF44A2S75UC2 3INTERNAL

O U R V I S I O N

The Internet of Value: Enable the world to move money like information moves today.

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O U R M I S S I O N

Remove friction from global payments.

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RippleNet Is Modern Global Payments Infrastructure

xCurrentProcess real-time

payments

xViaSend global payments

xRapidSource on-demand

liquidity

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Standardized connectivity

Send Payments

xVia

Senders BeneficiariesRippleNet

● Rich data attachments● End-to-end visibility

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Real-time, trackable global payments with no failures

Process Payments

xCurrent

● Rulebook for RippleNet adoption

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Source Liquidity

xRapid

Lower Liquidity Costs

Exchange Exchange

XRP Ledger

● On-demand liquidity sourcing● Reduce nostro accounts

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Head to Head: XRP Is the Best Digital Asset for Settlement

● 45 mins to settle

● Fees: $0.85/transaction

● 32 transactions per second

● 4 seconds to settle

● Fees: $0.0010/transaction

● 1500 transactions per second

BTC XRP

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270Team members

Our Experience FINANCIAL SERVICES

J.P. Morgan

Citi

Merrill Lynch

BlackRock

Visa

Fiserv

Paypal

Prosper

TECHNOLOGY

Google

Apple

Yahoo

Bloomberg

NASA

REGULATION

Federal Reserve

SEC

DTCC

NSA

San Francisco | NYC | London | Sydney | Mumbai

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A Sample of Our 100+ Customers

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XRP Ledger

A decentralized cryptographic ledger for issuing, holding, transferring, and trading arbitrary assets, including its native currency - XRP - a digital asset designed to bridge the many different currencies in use worldwide

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Some History

• Original idea proposed in 2004 by Ryan Fugger as “Ripplepay” - a decentralized P2P credit

system

• Development started in 2011 by David Schwartz, Arthur Britto, Chris Larsen and Jed

McCaleb

• 100 Billion XRP created at inception

• Distributed agreement (consensus) protocol instead of proof-of-work (mining)

• Replaces blocks with ledgers

• Allows arbitrary assets (IOUs)

• OpenCoin (private US company) founded in 2012 with 80 Billion XRP grant from creators

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Ledgers

• Replace UTXO set found in Bitcoin

• Form a secure hash chain

• Contains all current state information

• Advanced through transaction sets

• Can be forgotten (no prior ledger history needs to be stored)

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Ledger

• Contain persistent state

• Contain transactions

• Contain metadata

• Contain sufficient information to derive itself from its predecessor

• Support more complex transactions

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Ledgers: Advantages

• Reliable agreement on network state

• Control over the growth of state

• Faster spin up of new nodes

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Consensus

• Distributed agreement (consensus) protocol similar to Practical Byzantine Fault Tolerance

(PBFT)

• Does not require 100% agreement on the participants

• Does require substantial agreement on the participant

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Consensus: Key Points

• XRP Ledger’s method of solving the double spend problem

• Validators agree on a group of transactions to be applied in a given ledger

• Validators sign each ledger they build

• Analogous to a room full of people trying to agree

• All honest servers place a high value on agreement, second only to correctness

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Consensus Establishes Transaction Ordering

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Consensus: Why Is Transaction Ordering Important?

• Transaction validity is deterministic

• Transaction execution is deterministic

• Transactions either conflict or they do not

• If they do, all honest participants will agree that the second one must fail

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Consensus: What Do Validators Do?

• Agree on the last closed ledger

• Propose sets of transactions to include in the next ledger

• Avalanche to consensus

• Apply agreed transactions according to deterministic rules

• Publish a signed validation of the new last closed ledger

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Consensus: Why Is It Robust?

• If a transaction has no reason not to be included, all honest validators will vote to include it

• If a transaction has some reason not to be included, it is okay if it is not included

• Valid transactions that do not get into the consensus set will be voted into the next set by all

honest validators

• Algorithm is biased to exclude transactions to reduce overlap required

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Consensus: Advantages

• No rotating dictators

• No forced stakeholders

• Users choose who to trust

• Fast (3-5 second confirmation rounds)

• Past cannot be rewritten

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XRP Ledger: Key Features

• Open source, ISC license

• Public ledger, public transactions, public history, permissionless

• Equal access, peer-to-peer, no central authority

• Fast transactions with reliable confirmation

• Sophisticated cross-currency and cross-issuer payments

• Elliptic-curve cryptography - SECPK256K1 & ED25519 with native multi-signature support

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XRP Ledger: Format

# Ledger number

Account settings, tristlines, balances, etc.

Transaction

Timestamp

Validated

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How XRP Ledger Works

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XRP Ledger: Arbitrary Assets

• Assets other than XRP are identified by issuer and currency

• You must choose to hold an asset

• Assets other than XRP have counterparties

• Supports assets that reflect actual legal obligations

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Accounts: Identities In The Network

Alice Carol Bob

Dave Edward

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Trust Lines: A Directed Graph

Alice Carol Bob

Dave Edward

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Balances: Having Money

Alice Bob

$100

Physical World

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Balances: Having Money

Alice Bob

$100

Physical World

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Issuance: Digitizing Money

Alice Bob

$100

Physical World

Digital World

Alice Bob

$100

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Issuance: Digitizing Money

Alice Bob

$100

Physical World

Digital World

Alice Bob

$100

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Transfers

Alice Bob

$100

Charlie

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Transfers

Alice Bob

$100

Charlie

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Usability: Not So Much

Alice Carol Bob

Dave Edward

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Gateways: Hubs Of Trust

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Gateways: Islands Of Trust

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Gateways: Islands Of Trust

Offers

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XRP Ledger: Arbitrary Assets

• Money does not really move

• Payments swap ownership of assets

• Sender loses custody of the asset they sent

• Recipient gains custody of the asset they wanted

• Payments “ripple through” intermediaries

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How Consensus Works

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Validators Propose Transaction Sets

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Nodes Agree On Transaction Set

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Each Network Node Calculates A Ledger Validation

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Ledger is Validated When Supermajority of Peers Calculate the Same Result

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Network Recognises the New Validated Ledger Version

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Questions

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