The XRP ledger has activated the XLS-81 amendment, which includes a permissioned decentralized exchange (DEX) feature. The permissioned DEX feature is meant to cater to the needs of regulated users. The XRP ledger has enabled users to have controlled access to on-chain trading. The users are restricted to specific pools.
What Is XLS-81?
XLS-81 is a modification of the XRP Ledger that incorporates the “permissioned DEX” model. While the DEX on XRPL is open access, this new addition allows the issuer/operational level to have access controls on certain trading environments.
With this framework, participation can be restricted to pre-approved accounts, which can then be used to enforce compliance measures such as Know Your Customer (KYC) and Anti-Money Laundering (AML).
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How the Permissioned DEX Works
Under XLS-81, token issuers or pool operators can create liquidity pools with access restrictions, allowing only specific wallet addresses to trade.
These access restrictions can be controlled through credential-based verification mechanisms, allowing only authorized parties to participate in liquidity provision.
This structure maintains on-chain settlement and transparency and adds a further layer of compliance that is specific to institutional use cases.
Targeting Institutional and Regulated Use Cases
The activation of XLS-81 targets institutions that demand compliance measures before participating in any form of trading involving digital assets. Traditional financial institutions and asset management firms have limitations when it comes to permissionless DeFi.
By offering the permissioned option, XRPL aims to fill the gap between decentralized infrastructure and regulatory requirements, which could open the door for more enterprise and institutional users.
Implications for the XRPL Ecosystem
The inclusion of a permissioned DEX model represents a structural expansion of the decentralized exchange functionality on the XRPL. The ledger already supports the issuance of native tokens and on-chain trading. However, XLS-81 introduces flexibility to both open and restricted market environments.
This dual approach will enable developers and issuers to choose between decentralized pools and trading venues, as per their requirements.
