Ripple CTO, XRP Community Debate Need for 10 XRP Reserve Fee on New XRPL Accounts

The Ripple CTO, David Schwartz, recently reiterated the necessity of a reserve fee for new accounts on the XRP Ledger (XRPL) amid community debate on its impact on adoption.

The X account of SpendTheBits, an XRPL-based payment solution, brought attention to concerns regarding the 10 XRP reserve fee for activating XRPL accounts. The account prompted the community to share their opinions on what they believe should be the appropriate fee.

As of press time, most community members, about 56%, expressed their preference for a 1 XRP fee, while 22% went for a higher fee of $1. Surprisingly, only 21% of participants voted in favor of removing the fees entirely. 

#XRPCommunity As many of you are aware, there’s a requirement for the fee reserve for activating #XRPL accounts. We’d like input from the community: What do you think the appropriate fee for activating a #XRPLedger wallet should be? Please vote & share your thoughts in the…

— SpendTheBits Inc. (@Spend_The_Bits) November 14, 2023

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Most individuals highlighted the effects of removing the fee entirely. Crypto-focused researcher Anderson cautioned against a zero XRP activation fee, stating that it could potentially invite spam.

The XRPL Differs from Other Networks

The SpendTheBits account questioned how other blockchain networks such as Bitcoin, Ethereum, Cardano, and Flare prevent spam without implementing an account reserve. In response, David Schwartz highlighted the differences in design philosophy.

Interestingly, the Ripple CTO explained that unlike some other chains, XRPL’s account reserve serves multiple purposes, providing users with an account, an owner directory, and two other objects. Importantly, he clarified that users are not directly charged the reserve.

Either their accounts are not as heavy as XRPL’s or they charge the fees in some other way. For example, most ethereum chains charge you when you store data. An XRPL account reserve gives you an account, an owner directory, and two other objects.

You aren’t even really charged…

— David “JoelKatz” Schwartz (@JoelKatz) November 15, 2023

Instead, it goes for covering transaction fees and market participants can recover it by removing objects or deleting the account. Recall that Poloniex deleted over 85,000 XRP accounts in June, raking in $1.5 million in recovered fees.

Schwartz emphasized that XRPL was not initially designed for a large number of low-value accounts but rather focuses on features like destination tags to reduce the need for numerous accounts. Poloniex’s account deletion spree was due to the exchange eventually switching to destination tags.

Could DIDs Help?

Meanwhile, responding to the original post from SpendTheBits, XRPL consultant Chris acknowledged the importance of the reserve fee for spam prevention but suggested exploring alternatives. 

The reserve fee is for spam prevention and it’s important, it can’t just be ignored because it doesn’t fit with a projects use-case. It’s true that it makes onboarding more difficult but it’s a fine balance. However I believe the answer could lie in the new DiD standard. Using a…

— ChrisD@xrpl365 🪝🏴‍☠️ (@xrpl365) November 14, 2023

He proposed considering the new Decentralized IDs (DIDs) standard as a potential solution, presenting it as a means to maintain spam protection without the financial barrier from the reserve fee. 

It bears mentioning that the XLS-40D proposal went live in May, seeking to introduce decentralized identities to the XRP Ledger, featuring compliance with provisions of the World Wide Web Consortium (W3C) standard. The XLS-40D amendment features in the rippled v2.0.0.

Notably, Chris stated the need to prevent intentional bloating of the ledger, suggesting that DID could be a viable alternative with a time cost associated with setup and a requirement for minimal personally identifiable information.

Schwartz responded to Chris’s proposal, noting that issuing DIDs doesn’t inherently prove a unique human identity. He highlighted the current absence of robust decentralized methods for verifying unique human beings, citing Worldcoin’s approach as an example.

Chris agreed with Schwartz’s argument but further raised concerns about the reserve fee acting as a negative barrier, hindering businesses from onboarding customers. He stressed that this problem identified by SpendTheBits remains.

Schwartz concurred, expressing agreement that finding better solutions to address this issue is crucial. He acknowledged the validity of SpendTheBits’ concerns, noting the need for solutions to balance spam protection with lowering barriers for genuine entry. Schwartz proposed using side chains like Xahau.