XRP, Swift on the Blockchain

Launched in 2012 by Ripple Labs, the XRP Ledger (XRPL) is one of the longest-standing and most well-established blockchain networks, designed to address inefficiencies in traditional financial systems. It serves as the foundation for RippleNet, a global payments network that leverages XRPL’s speed and cost efficiency. Its native gas token, XRP, enables fast, cost-effective transactions with near-zero fees, making it a key component of the network’s functionality. XRP also serves as a bridge currency for cross-border payments, facilitating seamless value transfer and acting as a settlement asset between parties. Ripple is striving to bring SWIFT to the blockchain by modernizing cross-border transactions with its decentralized network, offering a faster and more efficient alternative to legacy financial messaging systems.

With transaction costs typically measured in fractions of a cent, as seen in figure 1, the XRPL is one of the most cost-efficient networks among the top three blockchains by market capitalization, offering a significantly lower-cost alternative to Ethereum and Bitcoin for payments and asset transfers. For over a decade, the XRPL has supported cross-border and cross-currency transactions, tokenization of real world assets (RWAs), and various financial applications, leveraging its speed, cost efficiency, and built-in features—including native currency & token issuance, a decentralized exchange (DEX), escrow mechanisms, compliance tools, and token management capabilities.

Beyond payments, the XRPL is designed for the tokenization of real-world assets and other financial use cases, including liquidity provision and decentralized finance (DeFi). It natively accommodates NFTs, stablecoins, and synthetic assets, integrating these within a composable framework that features a central limit order book (CLOB) and an automated market maker (AMM).

The XRPL’s base layer does not currently support arbitrary smart contracts—a deliberate design choice to maximize security and stability. However, smart contract functionality is enabled on the XRPL via Ethereum-compatible sidechain(s), complementing ongoing efforts to expand XRPL’s functionality. Additionally, sidechains provide an alternative execution environment, further enhancing the network’s flexibility and broadening its use cases.

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Figure 1: Bitcoin Network, Ethereum, and XRPL Average Transaction Cost During Periods of Heightened Activity

Source: 21Shares, BitInfo

Before we dive deeper, let’s first explore how the XRPL network operates and its relationship with the XRP token, shedding light on what makes it so fast, secure, and cost-efficient.

How the XRP Ledger works

The XRP Ledger (XRPL) is built for fast, secure, and cost-efficient transactions, making it a highly effective blockchain for financial applications. Unlike traditional networks that rely on energy-intensive mining (Proof-of-Work) or large token holdings (Proof-of-Stake), XRPL uses a unique method to validate transactions efficiently without requiring massive computational power or wealth concentration. This section explores how the network operates, including its transaction process, the role of different nodes, and why it remains one of the most scalable and low-cost blockchain solutions.

At the core of XRPL’s efficiency is its Proof-of-Association (PoA) consensus mechanism, previously known as the Federated Byzantine Consensus Protocol. Instead of relying on miners or staked tokens to secure the network, PoA uses a Unique Node List (UNL)—a group of trusted validators responsible for approving transactions. These validators, often selected from lists recommended by Ripple or other reputable sources, ensure that only reliable participants contribute to the decision-making process. To become a validator, a node must earn trust from others, meaning financial resources alone are not enough to influence the network.

Within the XRPL, nodes serve different roles:

• Validators actively participate in reaching consensus and voting on network upgrades but do not receive financial rewards—similar to full nodes in Bitcoin or Ethereum.
• Stock nodes help process and relay transactions but do not take part in the consensus process. They primarily support developers and applications that need access to ledger history and network data.

XRPL’s transaction process is designed for speed and efficiency. The ledger updates approximately every 3–5 seconds through a two-step process:

• Consensus Stage: Nodes exchange and refine transaction proposals, working towards agreement.
• Validation Stage: Once 80% of trusted validators approve a transaction, it is finalized and added to the ledger in a fixed order. If multiple versions of the ledger exist due to high network activity, the process repeats until an 80% agreement is reached.

Figure 2: XRP Consensus Mechanics

Source: xrpl.org

Thanks to this streamlined process, XRPL can handle approximately 1,500 transactions per second (TPS)—far more than Bitcoin or Ethereum—while keeping fees near zero. It also supports tokenized assets, NFTs, synthetic assets, and automated market makers (AMMs) through its built-in decentralized exchange (DEX). These features make XRPL a powerful settlement network for cross-border payments, financial applications, and tokenized asset management.

XRPL achieves fast and low-cost transactions by relying on a trusted group of validators instead of mining or staking, making it a highly efficient and scalable blockchain solution. This efficient network design not only ensures fast and low-cost transactions but also highlights the essential role of XRP in maintaining security, enabling liquidity, and facilitating seamless value transfers across the ecosystem.

How the XRP token interacts with XRPL

The XRP token plays a crucial role in the XRP Ledger (XRPL) by facilitating transactions, preventing spam, and serving as a bridge currency for cross-border payments. Every transaction on the XRPL requires a small amount of XRP as a transaction fee, ensuring network security by deterring spam attacks. Unlike Ethereum, where gas fees vary based on network congestion, XRPL fees are consistently low, often costing fractions of a cent. Additionally, XRP enables fast and cost-efficient liquidity movement by acting as an intermediary asset in multi-currency transactions. This makes it especially useful for cross-border payments and on-demand liquidity (ODL) solutions, where XRP can be used to convert and transfer value instantly between different fiat currencies. As the native ASSET of the XRPL, XRP is also required for account reserves—each wallet must hold a minimum balance of XRP to prevent network abuse.

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Figure 3: XRP Active Address Count

Source: 21Shares, Coinmetrics

While XRPL serves as the decentralized backbone for fast and cost-efficient transactions, RippleNet builds on this foundation to deliver enterprise-grade payment solutions for financial institutions. By leveraging XRPL’s speed, security, and liquidity efficiency, RippleNet enhances cross-border transactions by enabling real-time settlement

RippleNet

RippleNet is a global blockchain-based network developed by Ripple to facilitate seamless cross-border transactions among financial institutions and payment providers. By connecting banks, remittance service providers, and other financial entities, RippleNet enables secure, real-time settlement of funds, offering enhanced speed, efficiency, and cost-effectiveness compared to traditional banking systems. One of its key features is the use of XRP as a bridge currency, which helps source liquidity during cross-border transactions, eliminating the need for pre-funded accounts in destination currencies and reducing costs and processing times. Designed to integrate seamlessly with existing banking systems, RippleNet provides a faster and more reliable way to conduct international payments while fostering interoperability and standardization across different currencies and borders.

To support these capabilities, RippleNet offers a suite of solutions tailored to different financial needs, including xCurrent for real-time payment processing, xRapid for on-demand liquidity sourcing, and xVia for seamless global payment integration. Each of these solutions plays a critical role in enhancing the efficiency, transparency, and cost-effectiveness of cross-border transactions.

xCurrent

xCurrent is Ripple’s enterprise software that enables banks to process real-time cross-border payments while lowering settlement costs. It integrates seamlessly with existing banking infrastructure through an API or translation layer, ensuring compliance with risk and security frameworks. By offering instant transaction processing, xCurrent allows banks to differentiate themselves with enhanced payment services.

xRapid

xRapid is designed to help payment providers and financial institutions source on-demand liquidity while minimizing costs. Traditionally, cross-border payments require pre-funded local currency accounts, which increases liquidity costs. xRapid leverages XRP as a bridge currency to enable real-time payments, reducing capital requirements and improving transaction efficiency, particularly in emerging markets.

xVia

xVia provides corporations, banks, and payment providers with a standardized API for sending global payments across multiple networks. Without requiring software installation, xVia offers full transparency into payment status and allows for the inclusion of additional transaction details, such as invoices and attachments. This simplifies international payments and enhances efficiency for businesses operating across different regions.

By leveraging these solutions, RippleNet has attracted a growing network of financial institutions, payment providers, and even central banks seeking to modernize their cross-border payment infrastructure. The network processes over 1 million transactions per day, as seen in Figure 4, demonstrating its scalability, efficiency, and increasing adoption among financial institutions. This high transaction volume highlights RippleNet’s ability to support real-time, low-cost global payments while reducing reliance on traditional banking intermediaries.

Figure 4: XRP Transaction Count vs XRP Transfer Count

Source: 21Shares, Coinmetrics

RippleNet Users

Below is a list of financial institutions, payment providers, central banks, and governments that have integrated RippleNet or are experimenting with its technology to enhance cross-border payments, improve liquidity, and modernize global financial infrastructure.

Institutions Using RippleNet

RippleNet is widely adopted by financial institutions, payment providers, and central banks to streamline cross-border transactions, enhance liquidity, and reduce costs. Unlike traditional payment systems that rely on intermediaries, RippleNet enables real-time, low-cost settlements with On-Demand Liquidity (ODL) using XRP as a bridge asset.

American Express leverages RippleNet in partnership with Santander to power real-time, trackable cross-border payments for businesses. Similarly, Banco Rendimento and Bitso use Ripple’s ODL to improve remittance flows in Latin America, making transfers faster and more cost-effective. Bank of America, one of Ripple’s high-profile partners, has been exploring blockchain-based settlements to enhance efficiency in interbank payments.

Central Banks and Global Recognition

Several central banks have partnered with Ripple to explore blockchain-based payment solutions. The Royal Monetary Authority of Bhutan (RMA) is leveraging Ripple’s CBDC platform to promote financial inclusion and digital transactions. The Saudi Central Bank (SAMA) has tested Ripple’s technology for modernizing remittances, while the Bank of Thailand (BOT) has collaborated with Ripple to assess DLT-powered cross-border settlements.

Beyond these partnerships, Ripple has gained global recognition. The World Economic Forum (WEF) has endorsed Ripple as a leading blockchain innovator in cross-border payments, highlighting its potential to revolutionize the financial industry. This recognition underscores Ripple’s role in shaping the future of digital finance on a global scale.

XRP Tokenomics

XRP is the utility token of the XRPL ecosystem, with a fixed total supply of 100 billion tokens, making XRP distinct from digital assets such as Solana (SOL) and Ethereum (ETH), which have an unlimited supply. Unlike many blockchain projects, XRP was pre-mined at launch, with Ripple Labs initially holding a significant portion of the supply. To address concerns about centralized control, Ripple implemented an escrow system in 2017, locking 55 billion XRP into a series of time-released escrow accounts. Each month, 1 billion XRP is unlocked for Ripple’s use, with any unused tokens returned to escrow at the end of the cycle. This mechanism ensures predictable and transparent token distribution, preventing sudden supply shocks that could destabilize the market.

XRP serves multiple functions within the XRP Ledger (XRPL) and RippleNet ecosystem. XRP is  used to pay transaction fees, which are burned upon execution, making XRP slightly deflationary over time. In December 2024, an average of roughly 4,500 XRP were burned daily as transaction fees, gradually reducing the total supply. Additionally, XRP acts as a bridge currency in On-Demand Liquidity (ODL) transactions, enabling efficient cross-border settlements without requiring pre-funded accounts. Unlike Proof-of-Stake (PoS) blockchains, XRP holders do not earn rewards from staking, and the consensus process does not rely on mining incentives. Instead, XRP’s value proposition is tied to its utility in payments, liquidity solutions, and institutional adoption within RippleNet and the broader financial ecosystem.

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‍Figure 5: XRP Tokenomics Metrics

Source: 21Shares, Coingecko

Future outlook: RLUSD, Ondo

As the XRPL ecosystem continues to evolve, its focus remains on institutional adoption, RWA tokenization, and financial innovation. With new developments in stablecoins, RWAs, DeFi, and regulatory compliance, XRPL is positioning itself as a cornerstone for institutional blockchain solutions.

Ripple’s RLUSD Stablecoin

One of the most significant advancements in XRPL’s growth as an ecosystem is Ripple USD (RLUSD), a fully backed stablecoin designed for fast, secure, and compliant transactions. Issued natively on both the XRP Ledger and Ethereum, RLUSD maintains a 1:1 peg to the US dollar, backed by cash and cash equivalents to ensure stability and liquidity. Its seamless integration into real-time payments, cross-border settlements, and institutional finance strengthens XRPL’s role as a global payment infrastructure.

Beyond its direct utility, RLUSD also enhances the XRP ecosystem by increasing on-chain liquidity, transaction volume, and institutional adoption. As RLUSD facilitates settlements, payments, and DeFi activity on XRPL. RLUSD drives network activity on XRPL, increasing transaction volume and demand for XRP, which is required to pay fees.Thus, ultimately reducing XRP’s circulating supply through its deflationary burn mechanism. Additionally, RLUSD’s position as a widely adopted settlement asset reinforces XRPL’s value proposition, attracting more enterprises and institutional players. This synergy between RLUSD and XRP further solidifies XRPL’s position in stablecoin settlement, liquidity management, and enterprise blockchain adoption, ensuring its relevance in the future of digital finance.

Every blockchain ecosystem seeking adoption and institutional legitimacy requires a stablecoin, as it provides a stable medium of exchange, a gateway to traditional finance, and a foundation for DeFi applications. By introducing RLUSD, XRPL strengthens its competitive position among major blockchain networks, making it more appealing to financial institutions, enterprises, and liquidity providers looking for a secure and scalable on-chain settlement solution. As Figure 6 shows, RLUSD has successfully maintained its peg to the U.S. dollar, reinforcing its stability, reliability, and suitability for institutional use in on-chain financial transactions.

Figure 6: XRP Price, RLUSD-USD Peg

Source: 21Shares, Coingecko

Ripple-Ondo Finance Partnership: Tokenized U.S. Treasuries on the XRPL

Further expanding XRPL’s institutional offerings, Ripple has partnered with Ondo Finance to bring tokenized U.S. Treasuries (OUSG) to the XRPL. OUSG, backed by BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), offers institutional investors seamless access to yield-bearing RWAs. Through this integration, OUSG can be minted and redeemed 24/7 using Ripple’s RLUSD stablecoin, enabling instant settlement and improved capital efficiency. Ripple and Ondo have also committed to seeding initial liquidity, fostering greater adoption of RWAs on XRPL. This partnership strengthens XRPL’s role in bridging traditional finance and DeFi, reinforcing its status as a leading blockchain for institutional-grade tokenization and liquidity management.

Investment Case

XRP is positioned as a scalable, low-cost alternative to SWIFT, which facilitates over $150 trillion annually in global financial transactions. Unlike SWIFT, which relies on pre-funded accounts and slow, multi-day settlements, XRP provides instant, cost-efficient cross-border payments. Through RippleNet’s On-Demand Liquidity (ODL), XRP eliminates the need for nostro accounts, unlocking capital, and improving liquidity efficiency for banks, financial institutions, and enterprises.

If XRP were to capture 2%, 5%, or 10% of SWIFT’s market ($3T, $7.5T, and $15T in annual volume, respectively), its role in financial settlements could drive significant adoption and demand. To estimate a price target, I use the Transaction Velocity Model, which assumes that XRP is transacted multiple times per year rather than being held as a store of value. I assume a transaction velocity of 10—meaning each XRP is used 10 times per year in transactions. The formula for XRP’s theoretical price at a given market share is:

where:

• XRP Circulating Supply = 57.76 billion XRP
• Transaction Velocity = 10

Applying this model, the estimated price targets

• $5.19 (2% of SWIFT) or a 2.15x to $301.5 billion market cap
• $12.98 (5% of SWIFT) or a ~5.4x to $754 billion market cap
• $25.97 (10% of SWIFT) or a ~10.8x to $1.51 trillion market cap

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Additionally, XRP’s average correlation with traditional financial assets—a weak negative correlation (-0.14) with the U.S. Dollar Index (DXY) and a mild positive correlation (0.29) with the S&P 500 (SPX)—highlights its independent movement, reinforcing its appeal for institutional investors and global payment networks. With growing institutional adoption, the rise of tokenized RWAs, and increased regulatory clarity, XRP has the potential to become a potential cornerstone of next-generation financial infrastructure.

Figure 7: XRP 30-Day Rolling Correlation - XRP vs BTC, DXY, and &SPX

Source: 21Shares, Yahoo Finance

Potential Headwinds: Made In America Tokens & XRP ETFs

An additional reason for the bullish case for XRP lies in Ripple's strong ties to the U.S. government, particularly its connection to President Trump, its status as an American-founded blockchain company, and its potential role in the U.S. digital asset stockpile. Unlike many other blockchain projects, Ripple is deeply embedded within U.S. financial and regulatory circles, positioning XRP as a potential strategic asset in the tokenization of global finance. With President Trump's increasingly pro-crypto stance and emphasis on fostering U.S.-based blockchain innovation, Ripple stands out as a homegrown digital asset solution that aligns with national interests in financial technology. Additionally, as the U.S. Treasury and Federal Reserve explore a digital asset stockpile, XRP's efficiency, regulatory compliance, and institutional partnerships make it a viable candidate for government-backed liquidity solutions.

Furthermore, Ripple CEO Brad Garlinghouse is reportedly being considered for a seat on President Trump's newly formed Crypto Advisory Council, which could further strengthen Ripple's influence in shaping favorable regulatory policies for digital assets. In addition, the recent filing of multiple spot XRP exchange-traded fund (ETF) applications by major asset managers indicates growing institutional interest in XRP as an investment vehicle. The potential approval of these ETFs could significantly enhance XRP's accessibility to traditional investors, further bolstering its adoption and market presence. These factors collectively reinforce XRP's long-term growth potential, solidifying its role as a key player in the future of global financial settlements.

Conclusion:

As financial markets evolve, XRP is positioned at the forefront of blockchain-based payment innovation. By addressing inefficiencies in traditional finance, XRPL provides a scalable, low-cost alternative to legacy systems like SWIFT, enabling instant, cost-efficient cross-border settlements. With its growing institutional adoption, expansion into RWA tokenization through partnerships like Ondo Finance, and the introduction of RLUSD as a stablecoin solution, XRPL is strengthening its role as a leading blockchain for institutional finance. As demand for efficient global payment solutions increase; XRP’s utility as a bridge asset and settlement token gives it significant room for growth, reinforcing its potential as a cornerstone of next-generation financial infrastructure.