Xahau network Review

Xahau network

xahau.network

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Their Official site text:

The Smart Contract Sidechain for the XRPL Ecosystem

Disclaimer: This crypto-asset white paper has not been approved by any competent authority in

any Member State of the European Union. The offeror of the crypto-asset is solely responsible for the

content of this crypto-asset white paper.

Version 1 - Published 28 August 2023

1. Summary

1.1 The Xahau Ledger (Xahau) is the smart contract sidechain for the XRPL

ecosystem. It is a fork of the XRP Ledger’s (XRPL’s) open-source rippled

codebase that embodies all the useful and innovative features of the XRPL,

including its environmental sustainability, but tweaks and upgrades the

codebase to support smart contracts.

1.2 Xahau’s core features are:

(a) XRPL Core: Xahau retains the key features that have made the XRPL one

of the most enduring and popular networks, including the XRP Ledger

Consensus Protocol (Previously: Ripple Protocol Consensus Algorithm), the

DEX, and the logic of protecting the ledger against spam and bloat by

charging and burning fees in the native token, but it substitutes the recent

XLS-20 NFTs for the cleaner, simpler URITokens.

(b) Hooks for Smart Contracts: The big new feature of Xahau is Hooks, the

smart contract implementation for rippled. Hooks are small pieces of

code installed on an account that impose rules on the transactions the

account sends or receives before those transactions can be finalized.

token, Xahau XRP (currency code: XRP+), and powered by better

tokenomics designed to reward validators and support smart contracts.

(d) Burn2Mint Liquidity: As an XRPL sidechain, Xahau will be linked to the XRPL

via a one-way Burn2Mint liquidity portal that allows users to clone their

XRPL account address on Xahau and burn XRP on mainnet in return for a

matching number of Xahau XRP.

(e) Genesis Hook Governance Game: Xahau’s Genesis account is powered

by a Hook that regulates, amongst other things, the emission of new

Xahau XRP and this Hook is governed by a two-tiered governance game

with up to 20 independently owned validators as participants.

1.3 In concert, these features create a new network within the XRPL ecosystem that

implements the Hooks amendment to deliver fast, cheap, secure smart

contracts for the XRPL ecosystem supported by a properly incentivised

community of validators and developers.

1.4 The development of the Xahau Ledger has been driven by the Xahau Launch

Alliance, five experienced and committed entities within the XRPL community

that have carried the cost and risk of establishing the new network without an

ICO.

1.5 Xahau will launch fully functional and decentralised with over 10 independently

owned validators run by a representative mixture of the XRPL ecosystem,

including developers, exchanges, and long-term community members.

2. Xahau – Built from the XRPL’s DNA

2.1 Xahaud - the software that runs Xahau - is a fork of rippled, the open-source

codebase of the XRPL. It retains the key features that have made the XRPL one

of the most popular and enduring networks since it was launched in 2012.

XRP Ledger Consensus Protocol

2.2 Xahau uses the XRP Ledger Consensus Protocol (Previously: Ripple Protocol

Consensus Algorithm) – sometimes called Proof of Association (PoA). It is

designed to overcome the limitations of traditional consensus mechanisms like

Proof of Work (PoW) or Proof of Stake (PoS), particularly the high energy

consumption associated with PoW.

2.3 The XRP Ledger Consensus Protocol (Previously: Ripple Protocol Consensus

Algorithm)Protocol works as follows:

(a) Validator Proposal: Each validator proposes a new set of transactions,

called a "candidate set," which they believe should be included in the

next ledger. This candidate set includes both new transactions and any

transactions that were not previously included in a validated ledger.

(b) Agreement Phase: Validators communicate with each other to exchange

and evaluate candidate sets. They independently verify the validity and

order of transactions proposed by other validators. Through a series of

iterative rounds, validators attempt to converge on a single candidate set

that the majority agrees upon.

specific candidate set, that set is considered "finalized." Finalized

candidate sets become the basis for the next ledger.

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(d) Ledger Closing: The ledger is closed, and a new ledger is created based

on the transactions in the finalized candidate set. This process occurs

roughly every 3-5 seconds in the XRPL, allowing for fast transaction

settlement times.

2.4 Under the XRP Ledger Consensus Protocol (Previously: Ripple Protocol

Consensus Algorithm), each validator specifies a UNL (Unique Node List) being

a list of other validators it trusts. The canonical ledger is found through the

overlap between the UNLs of all the validators.

2.5 To facilitate social consensus on the appropriate UNL, several entities, including

the XRPL Foundation, publish recommended Validator Lists (or VLs) of the

validators they deem suitably trustworthy. Following a generally accepted dUNL

helps ensure you stay on the main ledger and do not unintentionally end up

following an irrelevant fork. Xahau will follow a similar, social-consensus

approach to defining a dUNL, with organisations like the XRPL Foundation

publishing its recommended VL.

2.6 The XRP Ledger Consensus Protocol (Previously: Ripple Protocol Consensus

Algorithm) Protocol provides several advantages, including high scalability, low

energy consumption, and resistance to censorship and network forks. By utilizing

a set of trusted validators and this unique consensus algorithm, Xahau achieves

fast and secure transaction processing while maintaining decentralization and

reliability.

The DEX

2.7 Xahau retains a version of the XRPL’s limit order book decentralized exchange

(DEX) that allows users to trade and exchange assets directly on the ledger. The

DEX leverages Xahau's decentralized and trustless architecture to enable

peer-to-peer asset trading without the need for intermediaries.

2.8 In summary, the decentralized exchange works as follows:

(a) Order Creation: Users can create buy or sell orders on the DEX by

specifying the asset they want to trade, the desired quantity, and the

price they are willing to accept or pay.

(b) Order Matching: The DEX’s order book maintains a record of all open buy

and sell orders. When a new order is placed, the DEX automatically

matches it against existing orders based on price and quantity.

enabling users to trade between different assets. To facilitate this, the DEX

uses the ledger’s native currency as a bridge currency, allowing users to

convert one asset to the native currency and then to another asset.

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(d) Pathfinding Function: The pathfinding function is a key component of the

DEX. It helps users find the most efficient trading path when converting

one asset to another. For example, if a user wants to trade Asset A for

Asset D, but there is no direct market available, the pathfinding function

will search for the best sequence of trades (e.g., A to B, B to C, and C to

D) to achieve the desired conversion with minimal slippage and fees.

(e) Automatic Order Execution: Once a trade is matched, the DEX

automatically executes the transaction. The ledger's consensus

mechanism ensures that the transaction is validated and added to the

ledger, providing a high level of security and immutability.

(f) Trustless and Decentralized: The DEX operates in a trustless and

decentralized manner. It does not rely on a centralized exchange or

require users to deposit their funds into a third-party wallet. Instead, users

maintain control over their assets throughout the trading process,

reducing counterparty risk.

(g) Low Fees and Fast Settlement: Trading on the DEX incurs minimal fees

compared to traditional centralized exchanges. Xahau's consensus

protocol allows for fast settlement times, enabling near-instantaneous

transaction processing.

2.9 With these features, the DEX provides users with a convenient and secure

platform for peer-to-peer token trading. By leveraging the trustless and

decentralized nature of Xahau, the DEX offers efficient cross-token trading and

seamless order matching while maintaining user control and privacy.

Burned Transaction Fees

2.10 To protect itself against spam and bloat, the XRPL charges transaction fees and

account reserves in its native currency and burns all transaction fees, rather

than redistribute them to validators. Xahau follows this “fees charged and

burned” model to likewise protect itself.

2.11 While this is a proven mechanism for protecting the ledger, it has implications for

Xahau’s Tokenomics, as discussed later. The fees burned by Xahau’s smart

contracts, while still small, will be much higher and more variable than standard

transaction fees on the XRPL.

URIToken NFTs instead of XLS-20 NFTs

2.12 Unlike the XLS-20 NFT standard

1 recently introduced to the XRPL, which relies on

compressing NFTs into on-ledger “pages”, Xahau will use URIToken objects.

1 https://github.com/XRPLF/XRPL-Standards/tree/master/XLS-20

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2.13 URITokens (short for Uniform Resource Identifier Token) are an innovative way to

represent and manage NFTs, their metadata and ownership information within

Xahau. Each token is a first-class ledger object with a unique address that does

not change when the current owner does.

2.14 URIToken NFTs have many benefits over the XLS-20 NFT standard, including:

(a) Lightweight and Efficient: URITokens are first-class on-ledger objects that

can be created, destroyed, transferred, bought and sold, and which

interoperate easily with Hooks. Trading is limited to a single sell offer per

token, that can be accepted either by the specified destination account

or, if no destination is specified, then the general public. There is no

brokered mode.

(b) Interoperability and Immutability: URITokens come with a built-in

extensible metadata JSON standard and an optional Digest field (a hash

making the content of the NFT immutable). This provides flexibility for

developers and creators to choose their preferred storage solutions, such

as IPFS or traditional web servers. It also promotes interoperability with

existing NFT standards and platforms, facilitating the integration with the

broader NFT ecosystem.

keylet (on ledger address) that does not depend on the current owner of

the token. The NFT metadata and ownership information can be easily

accessed and updated through standard web protocols. Users can

simply click on the URI associated with an NFT to view its details, including

images, descriptions, and provenance. This approach simplifies the user

experience and reduces the complexity of interacting with NFTs on

Xahau.

2.15 Thus, URITokens provide a lightweight, flexible, and cost-efficient solution for NFTs

on Xahau.

3. Hooks – Smart Contracts for the XRPL Ecosystem

3.1 Hooks is a smart contract solution developed specifically for the XRPL

ecosystem. Hooks are small, efficient pieces of code defined on a Xahau

account that execute logic on transactions sent to or received by the account

before those transactions are finalised in the ledger. Hooks are thus a way for

developers to create and deploy smart contracts on Xahau, opening a wide

range of possibilities for decentralized applications (dApps) and automated

transactions.

3.2 Xahau implements the Hooks amendment as a sidechain so the XRPL

ecosystem can benefit from Hooks now rather than later. It also allows the XRPL

community to better evaluate whether and how to implement Hooks on the

XRPL mainnet in the future.

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Benefits of Hooks

3.3 Some key benefits of Hooks over other smart contract solutions include:

(a) Simplicity and Efficiency: Hooks are lightweight and efficient compared

to conventional smart contract solutions. The underlying architecture of

Xahau, which focuses on transaction settlement and fast consensus,

ensures quick execution of smart contracts without compromising

performance.

(b) Native Integration: Hooks are a layer-one smart contract solution and thus

live natively inside the ledger, allowing developers to create contracts

that interact directly with on-ledger objects, balances and transactions.

In contrast to layer-two smart contract solutions, this tight integration

simplifies the development process and ensures seamless interoperability

with Xahau's ecosystem.

and high scalability. Like most chains, Xahau can handle a high volume

of transactions per second, making it suitable for applications that require

fast and cost-effective smart contract execution.

(d) Security and Reliability: Hooks inherit the robust security and reliability of

the XRPL. The XRP Ledger Consensus Protocol (Previously: Ripple Protocol

Consensus Algorithm), which powers Xahau, ensures a decentralized

network with consensus among trusted validators. This strong security

foundation provides confidence for developers and users alike.

(e) Ecosystem Compatibility: Hooks are designed to be compatible with

existing XRPL tools and services, making it easier for developers to

integrate smart contracts into their applications. This compatibility

enables seamless interaction with other features of the XRPL, such as

decentralized exchanges and payment channels.

(f) Account Decentralisation: Using Hooks it is possible for a Xahau account

to be fully autonomous and to emit and receive transactions according

to the logic of its Hook, instead of relying on external private key holders

to manually authorise transactions.

Sample Use-Cases

3.4 By introducing smart contract capabilities to the XRPL ecosystem, Hooks offer a

powerful and efficient solution for developers seeking to build decentralized

applications and automate transactions. Examples of the kinds of functions

Hooks can achieve include:

(a) Whitelists: A Hook enabled account can protect accounts against fraud

or sanctioned transactions by being coded to only accept or send

transactions to whitelisted accounts.

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(b) Blacklists: A hook enabled account can be coded to refuse to receive or

send transactions to any prohibited (blacklisted) account.

received from nominated account and only forward or return those

assets if told to do so by a valid transaction that meets predetermined

criteria.

(d) Automated Registry: A Hook enabled account can act as an automated

registry and mint and redeem URI NFTs as evidence of registration or

registration rights.

(e) Self-Sovereign Treasury: Issued currencies can mimic decentralised,

counterparty-free assets by being deposited into a self-owned Account

with a Hook that emits the currency according to a disclosed and

predetermined emission schedule.

3.5 The combination of simplicity, low fees, scalability, security, and ecosystem

compatibility means Xahau offers early access to an attractive smart contract

solution for the XRPL ecosystem. Xahau’s experience with Hooks will help the

community determine whether and how to implement Hooks on the XRPL in the

future.

4. Xahau XRP – Native Token & Tokenomics

4.1 Xahau is secured by its native token, Xahau XRP. Its salient details are as follows:

Native Token: Xahau XRP

Ticker: XRP+

Smallest Unit: 1 drop or 0.000001 XRP+

Function: Xahau XRP is the currency of the network. It is a utility token to

purchase network services. Like the XRPL, transactions on Xahau incur a

fee or reserve that is charged in Xahau XRP to protect the Ledger against

spam and bloat.

Initial Liquidity: 600 million distributed to launch participants.

Max Supply: Uncapped.

Emission Mechanisms: The supply of Xahau XRP is determined via the

amendments enabled in Xahau’s consensus protocol:

● Burned XRP: XRP on the XRPL mainnet can be burned and minted

into Xahau XRP, using the Import amendment detailed in section 5

below.

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● Monthly Balance Adjustment: To put back into circulation some of

the XRP+ burned from transaction fees, each active user can

claim an increase in their account balance of ~0.34% of their

average monthly balance (equal to 4% pa. compounding). This

emission is controlled by the Protocol Governance Game which

uses a combination of the Hooks, BalanceRewards and the

XahauGenesis amendments.

● Monthly Seat Rewards: To put back into circulation some of the

XRP+ burned from the transaction fees, and to incentivise active

and appropriate governance, an amount matching the total

claimed Monthly Balance Adjustments is also rewarded to

Governance Game validators.

Burned XRP

4.2 The principal source of Xahau XRP is from XRP burnt on the XRPL and ported to

Xahau via the Burn2Mint Liquidity Portal (discussed below in Section 5).

4.3 The Xahau protocol, through the Import amendment, will allow an amount of

Xahau XRP equal to the current circulating supply of XRP (approximately 52

billion) to be minted in this way. This Burn2Mint liquidity portal is what makes

Xahau a sidechain of the XRPL and ensures the native token on Xahau is a

meaningful representation of XRP.

Initial Distribution

4.4 The Launch parties have invested significant time and resources to launch

Xahau, thus it would be unreasonable to also require them to use Burn2Mint. An

initial distribution is provided at the protocol level by the XahauGenesis

amendment.

4.5 The protocol will pay a modest 600 million Xahau XRP as follows:

(a) 12 million to each of the eight Governance Game validator Seats on

launch.

(b) 16 million additional to GateHub for DEX stablecoin liquidity

bootstrapping.

Xaman has carried the main technical and financial burden of

developing Hooks and xahaud. This additional distribution is for that effort.

(d) 328 million to the XRPL Foundation, to help ensure the health of the XRPL

Protocol ecosystem moving forward.

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Monthly Balance Adjustment

4.6 One challenge Xahau must manage is the additional expense of smart

contracts compared to normal XRPL transactions.

4.7 On the XRPL, transaction fees cost as little as one drop or 0.000001 XRP. Against

a total supply of 100 billion XRP, this is a trivial-but-sufficient cost. Hooks

transactions, on the other hand, can cost orders of magnitude more to set and

to trigger. Further, while every XRPL transaction is standardised, Hooks can vary

enormously in their complexity and cost. To properly protect itself against spam

and bloat from its Hooks, the Ledger must charge appropriately (and

dynamically) for the size and logic complexity of every Hook transaction.

4.8 The consequence is that, as a smart contract chain that burns fees, Xahau XRP

could easily be burned to near-zero, and certainly much more rapidly than

equivalent XRP would be burned on the XRPL, potentially leading to perverse

incentives to horde Xahau rather than use it to deploy and run Hooks.

4.9 To guard against these risks, Xahau needs a protocol-level mechanism that puts

burned tokens back into circulation, but one that does not simply incentivise

high fees. This is the purpose of the monthly balance adjustment.

4.10 The Monthly Balance Adjustment works as follows:

(a) Each month, each Xahau account can choose to claim (against the

protocol) an adjustment based on their average Xahau XRP balance

(computed since the last adjustment). The adjusted amount is the

equivalent of 4% p.a. compounded (roughly 0.34% per month).

(b) Users can claim their balance adjustment by sending a RewardClaim

transaction to the Genesis account at any time provided 30 days has

passed since the last claim. Doing so demonstrates they are an active

user.

BalanceRewards and XahauGenesis amendments, increases the user’s

account balance by the balance adjustment.

(d) Unclaimed balance adjustments are foregone as a penalty for inactivity.

(e) 4% is the initial rate at launch, but it can be changed via the Governance

Game if it proves too small or too large in the future.

4.11 This mechanism allows active users to claim a monthly adjustment that puts

further Xahau XRP into circulating supply, mitigating the risk of the token being

burned down to zero through smart contract execution fees.

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Monthly Governance Validator Rewards

4.12 The Xahau Genesis Account is enabled with a Hook that controls, among other

things, the emission of Xahau XRP. This Hook needs a governance arrangement

so that it can be monitored, amended, and/or replaced in the face of

changing network and real-world conditions.

4.13 It is well known that XRPL mainnet validators do not receive any kind of reward

for the services they provide for underpinning the mainnet Ledger. However,

infrastructure costs money to run, and real-world experience shows that this lack

of incentive leads to a lack of actively managed validators.

4.14 The Xahau Genesis Hook needs to know, or be told, which accounts it must trust

when deciding whether to update itself. So, those accounts must be known in

advance, rather than emerging from the overlapping UNLs.

4.15 The technical solution to this problem is an incentivised Genesis Hook

Governance Game that rewards certain Validators for overseeing the Hook. It

works as follows:

(a) There are 20 “Seats” on the Genesis Hook Governance Game.

(b) Each Seat is controlled either by a single Xahau Account (Level 1) or a

self-managing committee of 3-20 Accounts (Level 2).

th of the

total Monthly Balance Adjustments claimed that month.

(d) If a Seat is held by a committee of Accounts, the rewards for that Seat

are split in a manner of that committee’s choosing.

(e) If no users claim a Balance Adjustment that month no rewards are paid to

any validators.

(f) Each Flag Ledger (256 ledgers) an on-ledger record called a UNLReport is

generated. This report contains a list of validators’ public keys that 80% of

other validators believe participated adequately in consensus since the

previous Flag Ledger. The Genesis Hook will only distribute validator

rewards to Seats that correspond to the public keys of validators on the

UNLReport.

4.16 Thus, the Genesis Hook Governance Game includes a reward mechanism

designed to ensure that trusted accounts are rewarded for running trustworthy

validators, that those rewards are linked to user activity, and that those rewards

put new Xahau XRP into distribution, mitigating the risk of a token liquidity

crunch from high smart contract execution fees.

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5. Burn2Mint Liquidity Solution

5.1 While the XRPL ecosystem currently operates on a single chain, the ecosystem

will soon expand to encompass multiple parallel chains, like the Ripple/Peersyst

EVM sidechain and Xahau. These sidechains will offer enhanced scalability,

flexibility, and interoperability, fostering a more diverse and dynamic ecosystem

for XRP and related digital assets.

5.2 As a sidechain, Xahau Ledger must be capable of inter-chain value exchange

with the XRPL. Xahau will enable that value exchange with the XRPL via a

Burn2Mint liquidity portal that allows users to clone their XRP account address

on Xahau and burn XRP on XRPL mainnet in return for a matching number of

Xahau XRP in their cloned account on Xahau. This section explains the

Burn2Mint function and why it was adopted ahead of other mechanisms.

Existing Mechanisms and Their Flaws

5.3 There are several existing mechanisms for cross-chain value transfer, but each

has specific drawbacks as follows:

(a) Centralised Exchanges: Centralised exchanges (CEXs) offer opaque

liquidity on more than one chain. Most users will use a CEX to obtain their

first coins on a new chain, and these are an important but centralised

part of the ecosystem. Reliance on CEXs is a centralising factor in an

ecosystem.

(b) Layer 2 Bridges: Layer 2 bridges are semi-decentralised custodial lending

or wrapping services. Locking up collateral on one chain allows the user

to borrow against it on the second chain. Returning funds on the second

chain unlocks the collateral on the first chain. These services are

honeypots that attract exploits. Further, they have a lack of legal clarity in

many jurisdictions, including clarity on the legal role of the operators on

the bridge and the status of the locked coins.

atomic swap could be used to transfer value between the chains. In this

protocol two users wanting to perform opposite trades are match-made.

The protocol ensures that either both trades occur, or both do not. Atomic

swaps have three drawbacks. First, if the counterparty does not perform

their trade the first party must wait for the time-lock expiry. Secondly, a

critical mass of users on both chains must exist so that users wishing to

swap can always find a counterparty wishing to make the opposite trade.

Finally, if the directionality of the trading is generally in one direction it

may not be possible to find counterparties.

5.4 While none of the above mechanisms are precluded by Burn2Mint – that is, all

are a possible feature of Xahau in the future – Burn2Mint is a native cross-chain

value transfer mechanism that is immediately available and avoids all the

identified drawbacks.

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Burn2Mint Mechanism - Burning XRP on the XRPL

5.5 Xahau’s Burn2Mint allows a user with an account on the XRPL mainnet to clone

that Account on Xahau (same r-address and same private key/s) and then

burn XRP on the XRPL mainnet via an arbitrarily high transaction fee and mint a

matching number of Xahau XRP into their cloned Account on Xahau.

5.6 This mechanism involves the following steps:

(a) Burn Fees on XRPL: The first step involves burning a certain amount of XRP

on the XRPL by executing an AccountSet transaction with an arbitrarily

high fee. Once the transaction is validated, the high fee now represents

burnt (i.e. the irreversible destruction of) XRP. This XRP is removed from

circulation on the XRPL and can never be recovered based on current

ledger rules.

(b) Generating an XPOP (Proof of Burn): Using a special client that listens to

XRPL for Burn2Mint transactions and the validation messages for the

ledgers they appear in, an XPOP (see: XLS41) is generated for the

transaction. The XPOP is a non-interactive offline cryptographic proof that

the transaction was applied on the XRPL. Any party with an XPOP verifier

can verify that the burn happened.

using an Import transaction. The Import transaction must be performed on

Xahau by the clone Account (same r-address and same private key/s) of

the XRP Account that initiated the burn transaction. The XPOP is

converted into a hex blob and supplied as a field in the Import

transaction. If all conditions are met Xahau now mints the required

number of Xahau XRP to the Xahau Account.

(d) B2M Ratio Schedule: The amount of Xahau XRP minted in response to

each XRP burned is determined by the B2M Ratio Schedule. The B2M

Ratio Schedule starts at parity - 1 XRP burned mints 1 Xahau XRP - for the

first 2 million ledgers from launch. It then reduces smoothly with every

ledger closed - each XRP burned mints progressively less Xahau XRP - for

the next 28 million ledgers, until the Burn2Mint function self-terminates

after the 30 millionth ledger from launch.

Xahau’s B2M Ratio Schedule

Xahau Ledgers Closed Since

Genesis Amendment Activated

B2M Ratio

XRP Burned : Xahau XRP Minted

First 2 million ledgers 1:1

Next 28 million ledgers 1 XRP burned mints 1/28 millionth

less Xahau XRP per ledger closed

After the 30 millionth ledger from

launch

Burn2Mint disabled - no further

minting possible

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(e) Cloning Account on Xahau Ledger: The Import transaction is special

because it can be submitted using an Account that does not yet exist on

Xahau. If the clone Account does not yet exist on Xahau, it will be

created as part of the minting process, and the network will credit the

Account with 2 Xahau XRP, which covers the account reserve (1 Xahau

XRP) and 5 ledger objects, for free, to get started. If the Account is

created but Xahau is uncertain about its keying (because a RegularKey

or SignerList was used) then the account will be created in a blackholed

state. If the Account already exists on Xahau then the ImportSequence

number on the AccountRoot is verified against the Sequence in the burn

transaction (which is embedded inside the XPOP) to prevent replay

attacks. Upon successful Burn2Mint the ImportSequence is updated to

reflect the most recently submitted XPOP for this account.

(f) Key Synchronization: The keying information for an account on the XRPL

may also be imported to Xahau at any time, at the user’s discretion. This is

done by using a SetRegularKey or SignerListSet transaction on the XRPL

mainnet and then generating an XPOP from it. If the user does not wish to

change their keys on mainnet then they must repeat their existing

RegularKey or SignerList within the relevant transaction (thus executing

the transaction but not making any changes to the account keying). The

XPOP can then be used with the Import transaction on Xahau to transfer

the mainnet keying to the same account on Xahau. This is useful for

multisign accounts, vanity addresses and for accounts with a

compromised master key.

5.7 Together, these steps allow a user, if they ever so choose, to clone their existing

XRPL account on Xahau and to mint Xahau XRP into that clone account by

burning XRP on mainnet via transaction fees. The process both guarantees the

XRP has been burned and that both accounts are controlled by the same

person.

5.8 Anybody wishing to convert Xahau XRP back into mainnet XRP can do so by

trading it through a centralised exchange in lieu of other technical solutions

(bridges, atomic swaps or a reverse path Burn2Mint, if the Import amendment

goes live on the XRPL mainnet) being implemented.

Benefits of Burn2Mint

5.9 Burn2Mint function has several important benefits:

(a) Decentralised: No one can block access to the Burn2Mint mechanism,

and no authorization is needed to use it. For some users, in some cases,

Burn2Mint may be the only legal option to obtain liquidity on Xahau.

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(b) Self-sovereign Liquidity: Both sides of the Burn2Mint mechanism can (and

should) run on the user’s own infrastructure. The user burns XRP on their

own infrastructure, generates and submits the XPOP to their own

infrastructure, and thereby also mints the Xahau XRP on their own

infrastructure. Aside from being decentralised and censorship proof, this

means that everyone, but particularly exchanges and businesses, can

freely decide when and how much XRP to move to Xahau. They provide

their own liquidity to themselves, on demand, on their own infrastructure.

burnt. Because it no longer exists, the burnt XRP cannot become

someone else’s property, it cannot be held in trust, nor in a “Door”

account, nor in some sort of custodial or escrow arrangement. Therefore,

Burn2Mint is truly non-custodial and there is no counterparty or

intermediary.

(d) Exploit-Resistant: Burn2Mint XPOPs rely on the same trust mechanics that

secure the XRPL, in particular validators keys and validator list keys. As a

result, the Burn2Mint mechanism is at least as secure as the network itself

against witness (i.e. validator) hijacking and tampering.

(e) Key Free: In a traditional two-way bridge, a “Door” account containing

users’ locked funds is maintained by some set of signing keys or witness

keys. This means there are keys somewhere that could be used to gain

unauthorized access to the “Door” account and exploit the bridge by

distributing users’ locked funds to an unauthorized third party. By contrast

the Burn2Mint solution does not use a “Door” account, and thus there are

no keys and no locked funds to hack.

Impact on XRPL

5.10 Burn2Mint effectively gives every XRP holder the option to port their XRP to

Xahau. That option will be valuable and useful to the extent Xahau’s smart

contract features mean the market prices Xahau XRP higher than XRP on

mainnet. The progressive “halvening” of the B2M ratio and eventual disabling of

the B2M mechanism prevents any risk that all XRP might be burned in this way.

5.11 Enterprise users may be better served using centralised exchanges to purchase

the Xahau XRP they need. If the market values Xahau XRP the same as XRP on

mainnet this would imply sufficient liquidity of each token exists to meet user

demand.

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Burn2Mint Summary

5.12 Burn2Mint is a novel cross chain value transfer mechanism for XRPL protocol

and PoA-backed chains. The mechanism involves a value transfer primitive that

is self-sovereign, secure, and avoids many of the legal and technical pitfalls

associated with traditional value transfer methods. Its inclusion in the ecosystem

adds a native, decentralised option to transfer value from the XRPL without a

counterparty and without custody.

6. Xahau Governance Game

6.1 XRP Ledger Consensus Protocol (Previously: Ripple Protocol Consensus

Algorithm) chains rely on a robust overlap in validator UNLs to define the

canonical ledger. If a validator does not trust enough of the same machines

that everyone else trusts, they risk unknowingly listening to an irrelevant fork of

the ledger. Determining the best UNL is a matter of social (off-chain) consensus.

6.2 To assist that social consensus, various entities publish dUNLs – lists of validators

everyone should follow. Xahau will follow the same approach, with the XRPL

Foundation and others expected to publish such lists. So, like the XRPL, Xahau

will be a public permissionless chain for which anyone can run a validator. And

like the XRPL, any update of the protocol will be dependent on more than 80%

of UNL validators supporting the changes, in the same manner as the XRPL.

6.3 While the dUNL helps define the validators responsible for the canonical Ledger,

Xahau has a second governance challenge, not present in the XRPL mainnet:

the governance of its Genesis Hook. The XRPL mainnet minted all of its XRP on

creation. Xahau cannot follow this approach. Its native token needs to be

minted in response to the happening of predefined events (i.e. Burn2Mint,

Account Adjustments, Validator Rewards.) It uses a Hook on its Genesis Account

to achieve this.

6.4 This means Xahau needs a governance mechanism for its Genesis Hook in case

the Hook needs to be adjusted or replaced. This is known as the Governance

Game:

(a) Purpose: The Governance Game exists to ensure that the UNL validators

remain active and allows those active members to maintain the Hook on

the Genesis account that controls the distribution of Xahau XRP.

(b) Seats: There are 20 Seats at a table. A Seat is a Xahau Account whose

vote counts in the Governance Game.

is called the Level 1 table (L1 Table). This table by definition exists only on

the Genesis account according to the Governance Game Hook installed

there. A seat at the L1 table may be filled by an Account or may be

empty. These seats are called L1s.

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(d) L2 Table: An L1 seat may itself be filled by an Account which has another,

different, Governance Hook installed on it. The seats at this table are

called L2s, and the table is an L2 Table. The structure is a self-managing

committee of 3-20 Accounts that collectively control the L1 seat and its

voting rights. Thus up to 400 Accounts may be involved in the two layer

Governance game, depending on the mix of L1 and L2 Seats.

(e) Filling Seats: L1 Seats are filled or vacated by 80% vote of all existing filled

L1 Seats. For L2 Seats, the committee of Accounts that collectively holds

that L1 Seat invites or disinvites new members (up to a maximum or 20

and down a minimum of 3) by majority vote, or according to whatever

other logic or rules they deem fit. No other Seats have any control over

the members of an L2 Table.

(f) Voting: Each L1 Seat has 1 vote in the Governance Game. For L2 Seats,

the single vote of its L2 table is determined by whatever logic that L2

table decides. The default is more than 50% vote of the L2 Seat members

at that L2 table.

(g) Hook Changes: All changes to the Hook are voted on via the

Governance Game. A Hook change is only successful if supported by the

defined % vote of all Seats. The regular vote is 80%, but for the increase of

the rate of balance adjustment it is 100%.

(h) Rewards: To incentivise L1 Seats to run reliable validators, L1 Seats earn

monthly Rewards provided they actively participate in consensus.

(i) Foundation of dUNL: The validators run by those participating in the

Genesis Hook Governance Game should form the foundation of any

dUNL, as any Seat that performs unreliably risks being voted out by the

other Seats.

6.5 The different types of Seats allow for a greater diversity of participating

Accounts without undermining security. Level 1 Seats are suitable to Accounts

controlled by significant entities the community can trust, while Layer 2 Seats

allow a broader pool of participants, but since their collective participation

counts as 1 vote, their numbers do not overwhelm the trust placed in Level 1

Seats.

6.6 Thus, the Governance Game allows up to 400 Accounts to participate and

rewards those Accounts for doing so provided they also participate in

consensus by running a reliable validator.

7. The Xahau Launch Alliance

7.1 Xahau has been developed by an alliance of 5 independent entities with a

track record of building on and supporting the XRPL ecosystem. Those entities

are as follows:

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(a) XRPL Labs (Xaman), the software developer behind the XUMM wallet,

Hooks, and Xahaud that has carried most of the expertise and cost of

developing Xahau.

(b) GateHub Limited, a multinational technology company, crypto

exchange, and crypto service provider, including Stablecoins issued on

the XRPL.

providing secure hosting and a major provider of the infrastructure for the

XRPL (as Alloy Networks).

(d) Evernode Labs Ltd, the developer of the Evernode smart contract project

and responsible for deploying it to Xahau.

(e) Digital Governing OU, an incorporated entity associated with a globally

active firm for accounting, audit, and legal services.

8. Launch Fully Functional & Decentralised

8.1 Xahau will launch fully functional and decentralised without raising funds.

No Centralised Control

8.2 Xahau will launch with 8 of its 20 Governance Game Seats filled:

(a) 5 will be Layer 1 Seats, each filled by a member of the Xahau Launch

Alliance.

(b) 3 will be Layer 2 Tables, one of which will be filled by a committee of

Exchanges and the other a diverse committee of XRP community

projects, developers, and long-term supporters.

blockchain development, including software such as Hooks.

No Funds Being Raised

8.3 There is no ICO, and no funds are being raised from the launch.

8.4 The Xahau Alliance members have each independently funded their own

development efforts. There’s no communal funding, nor any pooling of money

or resources for the further development of Xahau. Nor is there any roadmap, or

“Xahau Foundation”, or other centralised treasury. Any further development is

wholly at the discretion of independent actors within the ecosystem.

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No Promises

8.5 The Governance Game members are independent entities. There is no

agreement, arrangement, or understanding between them about how to cast

their vote, deploy their resources, or use their assets, including any Xahau XRP. It

is only the logic of the Game – be a trustworthy Validator in the eyes of the

other members or be voted out of the Game – that drives Validator behaviour.

This is an inherent feature of the XRP Ledger Consensus Protocol (Previously:

Ripple Protocol Consensus Algorithm) (PoA) mechanism Xahau uses.

No Further Features Needed

8.6 While software, by its nature, needs to be maintained, there are no essential

functionalities missing from Xahaud or in need of further development for the

software to be useful as a smart contract sidechain of the XRPL.

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