Securely hold the majority of XRP and funds. To provide optimal security, this account's secret key should be offline.
Provide an additional layer of security between the cold and hot wallets. Unlike a hot wallet, the secret key of a warm wallet does not need to be online.
Conduct the day-to-day business of managing XRP withdrawals and deposits. Hot wallets need to be online to service instant withdrawal requests.
You can replicate what financial institutions do and use multiple XRP Ledger addresses to minimize the risk associated with a compromised secret key. The hot/warm/cold model is intended to balance security and convenience.
The Base Reserve is a minimum amount of XRP that is required for every address in the ledger. Currently, this is 10 XRP (10000000 drops).
The Owner Reserve is an increase to the reserve requirement for each object that the address owns in the ledger. Currently, this is 2 XRP (2000000 drops) per item.
When an address holds less XRP than its current reserve requirement, it cannot send new transactions that would transfer XRP to others, or increase its own reserve. Even so, the address continues to exist in the ledger and can send other transactions as long as it has enough XRP to pay the transaction cost. The address can become able to send all types of transactions again if it receives enough XRP to meet its reserve requirement again.
To submit transactions, an address must hold a minimum amount of XRP in the shared global ledger. You cannot send this XRP to other addresses. To fund a new address, you must send enough XRP to meet the reserve requirement.