A proposed amendment for the XRP Ledger indicates that flash loan attacks are "structurally impossible" due to the network's transaction architecture, protecting it from a type of exploit that has led to significant losses in Ethereum’s DeFi space.
By Shaurya Malwa May 31, 2026, 2:30 a.m. 3 min readMake preferred onKey Points:
- Recent attacks on DeFi protocols such as Thorchain, Drift, and KelpDAO have utilized flash loans, a feature not available on the XRP Ledger.
- The atomic nature of XRPL transactions prevents the inclusion of composable intra-transaction calls, rendering flash loan attacks unfeasible.
- As XRPL develops AMM features and its tokenized asset volume increases, institutional investors may consider this inherent resistance to exploits in light of Ethereum’s more established liquidity and DeFi framework.
Two major DeFi hacks in recent weeks share a common attribute: they exploited a mechanism absent on the XRP Ledger.
On May 15, Thorchain suffered a loss of approximately $10.8 million in a cross-chain raid that affected funds across Bitcoin, Ethereum, BSC, and Base. In April, Drift Protocol, a decentralized perpetual exchange on Solana, and KelpDAO, an Ethereum-based liquid restaking protocol, were responsible for over $600 million in combined losses.
Since 2021, cross-chain bridges have faced attacks resulting in over $2.8 billion in losses, according to Chainalysis, with a significant number of these incidents involving flash loans.
Flash loans allow traders to borrow large sums without collateral, provided they repay the loan within the same transaction. Legitimate uses include arbitrage across exchanges, collateral swaps, and liquidation bots that ensure solvency in lending markets.
However, this same mechanism can be misused for attacks.
In a typical flash loan exploit, an attacker borrows funds, uses them to manipulate an oracle or deplete a poorly designed liquidity pool, profits from the manipulation, and then repays the loan—all before the transaction finalizes. If any part of the process fails, the entire transaction reverts, meaning the attacker only risks transaction fees.
The XRP Ledger's architecture prevents such attacks. A recent draft amendment submitted to the XRPL standards repository, which proposes enhanced liquidity and StableSwap-style pools for its automated market maker, explicitly stated: "Flash loan attacks are structurally impossible. XRPL transactions are atomic without composable intra-transaction calls."
This means that while XRPL transactions can either fully succeed or fail, unlike Ethereum, they cannot invoke other contracts during execution. The sequence required for a flash loan attack involves at least three nested operations within a single transaction, which XRPL does not support.
This design choice comes with trade-offs. Flash loans have become integral to Ethereum DeFi, with leading protocols like Aave and dYdX offering them. Arbitrage traders utilize flash loans to exploit price disparities across exchanges instantly, while liquidation bots rely on them to maintain over-collateralized positions. Advanced DeFi users also depend on flash loans for collateral swaps that would otherwise require substantial capital locked for extended periods. XRPL sacrifices these functionalities to eliminate the associated exploit risk entirely.
Historically, this trade-off has not been significant, as XRPL's DeFi presence was minimal. However, this is evolving. The value of tokenized real-world assets on the XRP Ledger has surpassed $3 billion, bolstered by a recent pilot involving Ripple, JPMorgan, Mastercard, and Ondo Finance that achieved a tokenized U.S. Treasury redemption in under five seconds.
If the AMM amendment is approved, it could bridge the capital-efficiency gap that has hindered XRPL DeFi compared to Ethereum, allowing for a broader range of trading and yield strategies.
Should the AMM amendment succeed and XRPL's DeFi liquidity grow to a scale attractive to institutional investors, it will raise the question of whether this structural resistance to exploits is a genuine competitive advantage or merely a characteristic that institutions overlook in favor of existing liquidity sources.
More For You
Bitcoin’s biggest quantum risk may not be wallet keys. An early investor fears something bigger
By Shaurya Malwa|Edited by Sam Reynolds21 hours agoAndrew Gault, the venture capitalist who funded the quantum hardware labs now threatening bitcoin, says the industry is looking in the wrong place. Google's own security team moved in the same direction in March.
Key Points:
- Security experts warn that the most pressing quantum threat to bitcoin and the broader financial landscape is not wallet keys, but the encrypted authentication data currently being exchanged between institutions and quietly collected.
- Adversaries are employing a “harvest now, decrypt later” strategy, amassing encrypted interbank communications, payment records, and...