The recent activation of the AMMClawback amendment on the XRP Ledger (XRPL) has triggered discussions about the network’s decentralization.
Notably, the XRPL community recently witnessed the activation of the AMMClawback on Jan. 30, 2025, which essentially made it possible for tokens with clawback features like the Ripple stablecoin, RLUSD, to trade in AMM pools. Before now, the network barred these tokens from participating in any AMM pool.
However, as the community welcomed this development, which promises to boost liquidity for XRP and RLUSD on the XRPL DEX, market commentator and host of *The O Show*, Wendy O, suggested that XRPL was no longer decentralized.
She argued that the activation of the amendment made the XRPL a centralized network. When asked if she fully understood the amendment, she confirmed that she had covered it but maintained that it did not align with decentralization.
Her statements triggered discussions within the XRP community, with several prominent figures stepping forward to clarify how the feature functions and whether it affects the XRPL’s decentralized nature.
Moon Lambo Refutes Claims of Centralization
XRP community figure Moon Lambo countered Wendy O’s argument, stating that the clawback feature does not make XRPL centralized. He explained that the feature does not affect XRP itself, nor does it alter the decentralized consensus mechanism that has governed the network since its inception.
No, the clawback feature does not make the XRPL centralized.
The clawback feature has nothing to do with $XRP itself, and $XRP transactions cannot be reversed. This new feature does not change the decentralized voting mechanism that has been at the core of the XRP Ledger since…
— Moon Lambo (@MoonLamboio) January 31, 2025
According to Moon Lambo, decentralization means that participants have the freedom to create tokenized assets with specific features, including clawback. He argued that if a central authority prevented users from issuing tokens with clawback functionality, that would be a true sign of centralization.
He further emphasized that the XRPL remains decentralized because no single entity controls the network. The clawback feature only applies to specific issued tokens, not to XRP, and it does not override the validator voting process that determines changes to the ledger.
Since over 80% of validators voted in favor of the amendment and maintained their votes for two weeks, the process followed the XRPL’s decentralized governance model.
Understanding the Clawback Feature
For context, the clawback feature allows issuers to reclaim tokens under specific conditions, primarily to comply with regulatory requirements. However, it does not give token issuers control over the entire XRPL.
Notably, Moon Lambo provided an analogy to explain the difference between individual control and network-wide decentralization.
He noted that just as XRP holders have full control over their personal wallets, token issuers have certain privileges over their own assets. This does not mean they have control over the entire blockchain.
Similarly, he stressed that Ripple, as the issuer of RLUSD, has exclusive control over its stablecoin, including issuance and management. However, this control does not extend to XRP or the broader XRPL network. This also applies to any issued asset with clawback enabled.
Additional XRP Community Commentaries
Another XRP community figure, WrathofKahneman (WOK), explained that XLS-39, which went live in February 2024, was the first amendment to introduce clawback for issued tokens. Specifically, issuers must set this feature at the time of issuance.
🧠 Clawbacks on the #XRPL, a thread.
There are two XRPL amendments, XLS-39 & XLS-73, that enable issuers to reclaim issued tokens under specific conditions. These changes improve regulatory compliance but do not apply to #XRP itself. Let’s break it down.
🧵/ 5 pic.twitter.com/8iPdSF6qdt— WrathofKahneman (@WKahneman) January 31, 2025
Meanwhile, XLS-73, the most recent amendment, allowed assets with this clawback functionality to work with AMM pools. It also blocks frozen tokens from entering these pools, ensuring compliance with regulations.
WOK clarified that both amendments apply exclusively to issued tokens that require trustlines. Since XRP does not require a trustline, it is unaffected by these changes.
He noted that while some issued assets may be centralized, this does not mean XRPL itself is centralized. Instead, the XRPL is designed to support various financial models but continues to maintain a decentralized structure.
