Ripple Launching New Token Standard on XRP Ledger

Ripple is set to launch a new token standard on the XRP Ledger this month, aiming to enhance its support for real-world assets (RWAs). 

Jasmine Cooper, Ripple’s Head of DeFi Product, recently discussed these advancements in a podcast, highlighting a new token type called “multi-purpose tokens” (MPTs). Cooper explained that MPTs are specifically designed for RWAs, enabling the storage of metadata directly with the asset. 

This integration enhances the scalability and flexibility of XRPL, making it more suitable for institutional use cases and lowering the barrier to entry for these organizations. Her comments have garnered significant attention from the XRP community.

Details of Multi-purpose Tokens (MPTs) Launching on XRPL

Notably, the introduction of MPTs is a key component of Ripple’s broader strategy to establish a comprehensive institutional DeFi ecosystem on XRPL. This ecosystem aims to facilitate a range of functions, including asset issuance, value transfer, exchange, and credit, all while prioritizing security and regulatory compliance.

In May, Ripple published a report titled “Building Blocks of Institutional DeFi on XRP Ledger,” which previewed the launch of the MPT standard in Q3 2024. According to the report, MPTs will bring a new level of functionality and flexibility to XRPL.

The report revealed that MPTs will enable the establishment of intricate token systems that can represent various assets and rights through the use of metadata. This innovation is expected to be particularly beneficial for institutions seeking to tokenize diverse asset portfolios, allowing for efficient lifecycle management of digital assets.

Ripple describes MPT as a hybrid token standard that combines the benefits of both fungible and non-fungible tokens. Currently, fungible tokens on XRPL lack key features, most notably metadata.

For instance, tokenizing a bond on XRPL using traditional fungible tokens would not allow for on-chain recording of essential bond details, such as face value, maturity date, coupon rate, and payment dates. 

This information gap creates inefficiencies and reduces transparency, making on-chain bonds less practical compared to traditional centralized infrastructure.

To address these limitations, Ripple will introduce MPTs as a native token standard on XRPL, providing capabilities that developers can easily leverage through simple APIs from XRPL libraries. This development will enable more efficient, transparent, and flexible tokenization of assets on the XRP Ledger.

Community Reactions and Future Developments

In a post on X, Vet, an XRPL validator, highlighted a fresh development concerning the Multi-Purpose Token (MPT) standard. He announced that the first code proposal for MPT on the XRP Ledger has been released.

Vet noted that MPTs merge the advantages of fungible and non-fungible tokens, making them well-suited for tokenizing real-world assets like Treasury Bills.

Vincent Van Code, a software engineer, responded enthusiastically to this update, calling it a “game changer.” He also raised concerns about the potential impact on storage requirements for the rippled network, suggesting that it might be more efficient to store metadata externally and link back to the XRPL. 

This approach could incentivize hosts to store data and offer different storage classes and fees, from high-speed to slower options.

Vet agreed that while storing metadata does increase the storage burden on the rippled network, it is a more efficient approach than creating a large number of non-fungible tokens. 

This ongoing discussion reflects the XRP community’s engagement and interest in the potential of MPTs on the XRP Ledger.

All metadata is storage burden on rippled, but i think it's better than mass NFTs, its a good mix imo.

But the data linked is probably contracts and other RWA descriptions like for Tbills.

— Vet 🏴‍☠️ (@Vet_X0) August 30, 2024