Pseudo-Account

The XRP Ledger is an account-based blockchain where assets like XRP, Fungible Tokens, and Multi-Purpose Tokens (MPTs) are held by accounts, and are represented on-chain by an AccountRoot ledger entry. However, certain use cases require assets to be transferable to and from an object, which is why a pseudo-account is needed.

A pseudo-account is a special type of account that holds assets on behalf of an on-chain protocol, and is used in the following use cases:

• Automated Market Makers (AMM): The XLS-30 amendment introduced pseudo-accounts for AMMs by adding the AMMID field to the AccountRoot ledger entry. This field links a pseudo-account to an AMM instance, allowing it to track XRP and token balances in the pool and issue LPTokens on behalf of the AMM instance.

• Single Asset Vaults: A single asset vault pseudo-account is used to store deposited funds and issue MPT shares. A new VaultID field is introduced in the AccountRoot ledger entry, which links the pseudo-account with the vault.

• Lending Protocol: While still in development, this protocol is expected to use pseudo-accounts to hold loan funds.

A pseudo-account has strict limitations. It cannot receive payments from other accounts, cannot send transactions since it has no signing authority, and exists solely to store or issue assets.

Transaction Cost

A transaction that creates a pseudo-account incurs a higher than usual transaction cost to deter ledger spam. Instead of the standard minimum of 0.00001 XRP, the transaction must destroy an incremental owner reserve, currently 0.2 XRP.