Glossary of Terms

Definitions of the key terms used throughout this wiki, in one alphabetical reference.

Amendment — The mechanism by which the XRP Ledger's protocol rules change. A proposed amendment must be supported by 80% of trusted validators continuously for two weeks before activating. See What Is the XRP Ledger?.

AMM (Automated Market Maker) — A native XRPL feature (added 2024) providing pool-based, algorithmic trading liquidity alongside the order-book DEX. See Automated Market Maker.

Consensus — The process by which XRPL validators agree on the next ledger version's contents. See XRP Ledger Consensus Protocol.

DEX (Decentralized Exchange) — The XRP Ledger's native, protocol-level order-book exchange. See The Built-in Decentralized Exchange.

Drop — The smallest unit of XRP; 1 XRP = 1,000,000 drops.

Escrow — A native transaction type that locks XRP until a time or cryptographic condition is met. See Escrow.

Fee burning — The permanent destruction of a small amount of XRP with every transaction, rather than paying it to a validator. See Transaction Fees and Burning.

Gateway — An older term for a service that issues or redeems trust-line-based representations of fiat currency or other assets on the XRPL.

Genesis ledger — The very first XRP Ledger version, created in 2012, containing the full initial 100 billion XRP supply.

Hooks — Small, WebAssembly-based pieces of custom logic that can attach to an account, available on the Xahau sidechain but not XRPL mainnet. See Hooks, Sidechains, and Smart-Contract-Style Programmability.

Howey test — The U.S. Supreme Court framework (from SEC v. W.J. Howey Co., 1946) used to determine whether an arrangement is an "investment contract" and therefore a security. Central to the SEC v. Ripple case.

IOU — Shorthand for a balance issued via a trust line, representing a claim against the issuing account rather than a native asset. See Trust Lines and Issued Currencies.

ILP (Interledger Protocol) — An open, XRPL-adjacent protocol for routing payments across different ledgers and payment networks.

Ledger close — The moment the network finalizes a new ledger version through consensus, roughly every 3–5 seconds. See Ledger Structure and the Close Process.

LP token — A token representing a liquidity provider's share of an AMM pool on the XRPL.

Multi-signing — A feature allowing an account to require multiple designated signatures (with a configurable quorum) to approve transactions. See Advanced Account Features.

NFT / XLS-20 — The XRP Ledger's native non-fungible token standard. See NFTs on the XRP Ledger.

ODL (On-Demand Liquidity) — Ripple's product using XRP as a real-time bridge asset to avoid pre-funded currency accounts. See On-Demand Liquidity.

Owner reserve — The additional XRP an account must hold for each object it owns (trust lines, offers, escrows, and so on). See Reserves.

Payment channel — A native feature enabling many small, rapid off-ledger payments settled on-ledger periodically. See Advanced Account Features.

Programmatic sale — In the SEC v. Ripple case, an anonymous, algorithm-driven XRP sale on a public exchange, found not to be a securities transaction. See The Torres Ruling Explained.

Reserve requirement — The minimum XRP balance every account must maintain. See Reserves.

RippleNet — Ripple's network and software for cross-border payment messaging between financial institutions. See RippleNet.

rippled — The open-source server software that implements the XRP Ledger protocol. See Developer Tools & SDKs.

RLUSD — Ripple's USD-backed stablecoin, issued on both the XRP Ledger and Ethereum since late 2024.

Sidechain — An independent, bridged blockchain (such as Xahau or the EVM-compatible XRPL sidechain) that extends functionality not available on XRPL mainnet.

Testnet / Devnet — Public XRPL test networks using worthless test XRP, used for development and testing.

Torres ruling — Judge Analisa Torres's July 2023 summary judgment in SEC v. Ripple, distinguishing institutional from programmatic XRP sales. See The Torres Ruling Explained.

Trust line — A relationship allowing an account to hold IOUs issued by another account, up to a specified limit. See Trust Lines and Issued Currencies.

UNL (Unique Node List) — The list of validators a given XRPL node chooses to trust for consensus. See Unique Node List and Validators.

Validator — A server participating in the consensus process by proposing and voting on transaction sets. See Unique Node List and Validators.

Xahau — An independent, Hooks-enabled sidechain bridged to the XRP Ledger, with its own native token (XAH).

XRP — The native digital asset of the XRP Ledger. See What Is XRP?.

XRP II, LLC — A Ripple subsidiary specifically involved in some of the sales activity examined in the SEC litigation.

XRP Ledger (XRPL) — The decentralized blockchain protocol and network on which XRP exists. See What Is the XRP Ledger?.