David Schwartz Explains XRPL Consensus Model Was Not Built on XRP Staking

Ripple ex-CTO David Schwartz has clarified that the XRP Ledger’s consensus model was never designed around XRP staking or validator rewards.

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Instead, XRPL relies on what he described as “shareholder choice” to maintain consensus and prevent double spending.

The comments came after Schwartz resurfaced a six-year-old presentation titled The Best Incentive is No Incentive. In it, he explained why the XRP Ledger was built without mining or staking incentives.

• David Schwartz said XRPL consensus was built on user trust choices, not XRP staking or validator rewards.
• XRPL users maintain consensus by voluntarily choosing trusted validators and software implementations.
• Schwartz argued that mining and staking rewards can increase centralization and profit-driven behavior.
• XRPL avoids mining and staking to support low fees, fast payments, and reduced validator power.

Responding to the video, an X user asked Schwartz about his statement that XRPL uses “stakeholder-chosen scarcity” instead of proof-of-work or proof-of-stake. The user asked whether XRP itself was the scarce resource being chosen, especially since XRPL does not use staking.

Schwartz responded that XRPL’s consensus is not based on locking up XRP or financially rewarding validators. Instead, the network depends on users voluntarily agreeing on which validators they trust to order transactions and prevent double spending.

He added that, in practice, this mostly happens “invisibly” through users choosing software implementations and validator lists maintained by groups they trust.

In his Stanford presentation, Schwartz argued that blockchain systems work best when they minimize artificial incentives like mining rewards or staking yields.

He described Bitcoin miners and proof-of-stake validators as “artificial stakeholders”. In his view, their main motivation is to maximize profits rather than to protect the network itself.

Schwartz stressed that these incentives can create centralization pressures as participants naturally compete to reduce costs, gain scale, and extract higher rewards.

He compared these participants to what he called “natural stakeholders” — users who actually depend on the network for payments, trading, liquidity, or storing value.

Schwartz believes these users already share the same goal: keeping the network secure, fast, cheap, and reliable.

Meanwhile, Schwartz said the XRP Ledger was specifically designed to reduce the operational power of validators. It also removes many of the incentives that commonly exist in other blockchain systems.

Unlike proof-of-work networks, XRPL does not have mining competition, block reorganizations, or large pools of unconfirmed transactions waiting to be prioritized for profit. Validators mainly focus on agreeing on transaction order using fixed rules.

According to Schwartz, this design reduces the chances of censorship or manipulation because validators have fewer ways to profit from attacking the network.

He also said that avoiding mining and staking rewards helps XRPL maintain low fees, fast transaction speeds, decentralized exchange features, multisigning, payment channels, and pathfinding payments.

Schwartz’s comments come as debates in the crypto industry continue over decentralization, validator rewards, and blockchain governance. Many newer blockchains now use proof-of-stake systems, while Bitcoin still relies on proof-of-work mining.

XRPL remains one of the few major blockchain networks that operates without mining or staking rewards. Instead, it relies on trusted validators and community coordination.