David Schwartz, who co-founded XRP Ledger, proposed a transaction reservation scheme as a potential front-end solution for the network’s decentralized exchange and automated market maker.
His proposal was a response to a post from the XRP-focused account XRPresso.io, which argued that validators and well-connected nodes could exploit the visibility of transactions before validation to extract value from ordinary traders.
Initial concerns about XRPL
According to XRPresso, transfers are usually made He sits In a publicly visible queue before the ledger on XRPL is closed, with validators and some nodes able to see these pending trades. As such, they are in a position to evaluate whether their position in one place will be profitable, and then submit multiple entries to manipulate their position in the final primary standings.
Because this order is determined by a well-known deterministic formula that includes transaction hashes, submitting similar entries increases the odds of landing in a favorable slot relative to the target trade. This, XRPresso claimed, could result in ordinary users trading through standard wallets and apps being systematically disadvantaged while more sophisticated operators extract value from their trades.
Schwartz acknowledged the problem was real but retracted parts of the framework. he He pointed out That all participants have an equal opportunity to see transfers, they argued that validators gain no structural advantage unless several of them conspire. Such an action would be visible on-chain and lead to the removal of offending validators from trust lists, he said.
“If multiple auditors conspired, or a single auditor attempted to do so, it would be abundantly clear to everyone who was doing exactly that,” he wrote.
Furthermore, he said there have been no reports of anyone trying to do something like this, other than as a proof of concept. The biggest issue, according to him, is profitability, because to make money, actors would need high liquidity that would make the volumes worth the effort available and low liquidity to move the price measurably and at a reasonable cost.
However, it offered a solution in which the user submits a reservation transaction specifying the ledger sequence number and transaction ID, and pays the reservation fee. If the reservation succeeds and the actual activity is broadcast before this ledger is closed, it gets guaranteed priority over any other activity formed after the asset is revealed.
“This ensures that you can execute your transaction before any transaction formed after your transaction is disclosed,” the developer explained. “You can use this approach any time you want to make a transaction that you want to ensure cannot be placed or executed previously.”
The debate is at the forefront in DeFi
XRPresso responded that while the idea of Schwartz reservation is worth exploring, it would add cost and complexity and does not fully address the fundamental visibility issue in the pre-validation phase. According to them, targeted secrecy of details of pending proceedings would be a cleaner solution in the long term, with such methods already being used in other chains.
The fundamental problem is not unique to the XRP ecosystem, says Binance co-founder Changpeng Zhao Suggested Dark pool perpetuates last year’s DEX Zero-knowledge encryption is used to hide request data until execution. This idea has also drawn criticism, with some decentralization advocates claiming that hiding order books would only recreate the internal dynamics that cryptocurrencies were supposed to avoid.
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