Introduction of Permissioned Decentralized Exchange on XRP Ledger
In a significant advancement for the XRP Ledger, Yoshitaka Kitao, the CEO of SBI Group, announced via Twitter the introduction of a Permissioned Decentralized Exchange (DEX) on the platform. This development, described as a gateway to decentralized finance (DeFi) for traditional financial institutions, was detailed in a recent press release from Ripple.
Features of the Permissioned DEX
The Permissioned DEX is designed to enable regulated financial entities to engage in trading and value transfers on the XRPL without sacrificing compliance, scalability, or the decentralized nature that characterizes blockchain technology.
Ripple initially outlined its vision to enhance access to DeFi for financial institutions earlier this year, culminating in the launch of this Permissioned DEX. Unlike standard DEX platforms, this new exchange operates under a specific framework that allows only approved participants—aggregated into what is termed a Permissioned Domain—to conduct trades.
Operational Structure
This structure enables app developers to create order books for various cryptocurrencies, including XRP and stablecoins, but only for users who are pre-approved. The XRP Ledger is capable of hosting multiple Permissioned DEXs, each linked to its own Permissioned Domain that serves as a whitelist for traders.
Transactions on this kind of exchange are limited to those occurring within the same DEX, ensuring that all trading adheres to the established compliance standards. Ripple asserts that this innovative DEX facilitates a compliant trading environment while maintaining the benefits of decentralization, cost-effectiveness, and user sovereignty.
Benefits for Financial Institutions
By adopting the new Permissioned DEX, financial institutions can immediately access the XRPL’s decentralized trading capabilities while enjoying the benefits of regulatory compliance. This paves the way for institutional-level trading activities that are scalable and economically viable, with minimal transaction fees.
Potential applications for the new XRPL DEX include:
- Stablecoin and fiat foreign exchange swaps
- Payroll payments
- International business-to-business transactions
- Corporate treasury management
