XRP Ledger Proposal Aims to Prevent Flash Loan Attacks in DeFi
XRP Ledger's new proposal blocks the flash loan attacks costing DeFi hundreds of millions
Coindesk
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The XRP Ledger's new amendment proposal aims to eliminate flash loan attacks, which have cost decentralized finance (DeFi) platforms billions. Unlike Ethereum, XRPL's transaction structure makes such attacks impossible due to its atomic transaction design, which does not allow nested operations.
- 01Flash loan attacks have led to significant losses in DeFi, with protocols like Thorchain and Drift suffering over $600 million in damages.
- 02The XRPL's transaction model prevents flash loans, making it immune to this type of exploit.
- 03The proposed amendment includes features for automated market makers (AMMs) and aims to enhance liquidity on the XRPL.
- 04Tokenized real-world assets on the XRPL have reached over $3 billion in value, indicating growth in its DeFi ecosystem.
- 05The success of the amendment could position XRPL as a competitive alternative to Ethereum for institutional investors.
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The XRP Ledger (XRPL) has proposed an amendment that aims to block flash loan attacks, a significant threat in decentralized finance (DeFi) that has resulted in losses exceeding $600 million for various protocols. Flash loans allow users to borrow large sums without collateral, exploiting vulnerabilities in smart contracts. However, XRPL's transaction architecture makes such attacks 'structurally impossible' due to its atomic transactions, which do not support nested operations required for executing flash loans. This proposal comes as XRPL seeks to enhance its automated market maker (AMM) capabilities and expand its DeFi liquidity, which has been historically limited compared to Ethereum. The total value of tokenized assets on XRPL has surpassed $3 billion, showcasing a growing interest in its DeFi potential. If the amendment is approved, it could attract institutional investors who value the network's security against exploits, although the existing liquidity in Ethereum's ecosystem remains a significant factor in investment decisions.
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The proposal could significantly enhance the security and attractiveness of the XRP Ledger for DeFi applications, potentially increasing institutional investment.
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