XRP Ledger Security Review: Last Place Among 15 Blockchains Analyzed

The XRP Ledger, the blockchain behind the third-largest cryptocurrency, ranked last for security in Kaiko's quarterly Blockchain Ecosystem Ranking, scoring 41 out of 100. The main issues were a hack earlier this year, a low Nakamoto coefficient score, and a small number of validators. The network's limited validator distribution and approach to decentralization have raised concerns around its vulnerability to coordinated disruption.

The XRP Ledger, the blockchain underpinning the third-largest cryptocurrency, has recently faced scrutiny due to its low security ranking. According to a recent report by blockchain research firm Kaiko, the XRP Ledger scored just 41 out of 100, ranking last among the 15 blockchains analyzed [1]. This ranking was based on five criteria: governance, integration, liquidity, operational efficiency, and security.

The primary issues highlighted by Kaiko include a hack that occurred earlier this year, a poor Nakamoto coefficient score, and a relatively small number of validators. The Nakamoto coefficient score, which estimates the number of entities required to collude and compromise the network, is notably low for the XRP Ledger. This low score, along with its limited validator distribution, has raised concerns about the network's vulnerability to coordinated disruption.

The network's security was further compromised by a hack in April, where an official software package used by XRPL developers was compromised. This breach allowed for the injection of malicious code capable of stealing users' private keys. Although the core ledger and GitHub repository were not affected, the incident highlighted significant vulnerabilities in the network's software supply chain security [1].

In contrast to other networks like Ethereum and Solana, which have large, open validator sets, the XRP Ledger operates with around 190 active validators. However, only 35 of these are included in its default unique node list, a trusted subset used for consensus. This design aims to optimize speed and reliability but has been criticized for limiting diversity and increasing the network's vulnerability to coordinated attacks [1].

Ripple, the company behind the XRP Ledger, has not responded to requests for comment on these issues. However, Ripple's CTO, David Schwartz, has previously noted the XRP Ledger's real-world utility and institutional adoption, highlighting its potential as global financial infrastructure [3]. Despite these challenges, the XRP Ledger continues to evolve, with plans to introduce more programmability, compliance-grade capabilities, and deeper liquidity for institutional use.

In conclusion, the XRP Ledger's low security ranking, highlighted by Kaiko, underscores the need for further improvements in its security measures. While the network has shown significant real-world utility and institutional adoption, addressing its current security vulnerabilities will be crucial for maintaining its position in the global financial landscape.

References:
[1] https://finance.yahoo.com/news/xrp-ledger-sinks-last-place-093702328.html
[3] https://api.news.bitcoin.com/wp-json/bcn/v1/post?slug=ripple-cto-sees-xrp-ledger-as-key-infrastructure-for-global-financial-systems