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XRPL Proposes Update to Allow Issued Tokens to Be Used in Payment Channels Beside XRP

Wed, 04/13/2022 - 15:12
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Tomiwabold Olajide
XRP Ledger's escrow feature allows sending conditional XRP payments
XRPL Proposes Update to Allow Issued Tokens to Be Used in Payment Channels Beside XRP
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As shared on the XRPL Twitter handle, a proposed update to allow issued tokens to be used in payment channels and escrows just like XRP is currently in the works.

The XRPL (XRP Ledger) currently supports a variety of on-ledger negotiable instruments, including escrows, payment channels and checks. The XRP Ledger's escrow feature allows sending conditional XRP payments. Escrows are conditional payments that set aside XRP and give it out later if specific conditions are met.

The XRP that was set aside in an escrow account has been locked up. No one can use or destroy XRP until the escrow has been completed or terminated successfully. Payment channels are a more advanced feature that allow for sending "asynchronous" XRP payments that can be broken into small amounts and settled later.

However, these payment channels and escrows support only the native asset, XRP. This limitation is a barrier to wider-spread use of escrows and payment channels for a variety of reasons, including regulatory compliance, a reluctance to keep a counter-party-free asset (i.e., XRP), exchange-rate risk and volatility.

According to a Github release, this XLS proposes to introduce an amendment to the XRPL protocol which has the following goals: to allow escrows and payment channels to use issued tokens or fungible tokens. It aims to also allow issuers to retain freeze and authorization control over their issued currencies even when they are locked into instruments.

As previously covered by U.Today, RippleNet GM Asheesh Birla recently took to Twitter to clarify some ''misconceptions'' about Ripple's ODL in the wake of Strike's Shopify integration.

The top exec stated that using digital assets such as XRP is one component of the ODL solution. He further notes that despite peculiar challenges such as volatility and regulatory concerns associated with crypto liquidity, Ripple presently has more than 20 ODL markets open as it continues to push global coverage. Ripple's On-Demand Liquidity (ODL) allows customers to instantly move money around the world at any time without the need for prefunded accounts.

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About the author

Tomiwabold is a cryptocurrency analyst and an experienced technical analyst. He pays close attention to cryptocurrency research, conducting comprehensive price analysis and exchanging predictions of estimated market trends. Tomiwabold earned his degree at the University of Lagos.