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 theAccountRoot
ledger entry. This field links a pseudo-account to an AMM instance, allowing it to track XRP and token balances in the pool and issueLPTokens
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 theAccountRoot
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.