At the weekend night of March 2, the crypto market was wailing everywhere, and Trump suddenly issued a statement about the U.S. Crypto Reserve: "The U.S. cryptocurrency reserve will enhance the status of this key industry, despite years of corruption attacks during Biden. That's why my executive order for Digital Assets directed the Presidential Working Group to advance its crypto strategic reserves including XRP, SOL and ADA. I will ensure that the United States becomes the crypto capital of the world. We are making the United States great again!"

The crypto market was immediately boosted, which was "an arrow through the cloud, and thousands of troops came to meet." Although BitMEX co-founder Arthur Hayes commented that "no new ideas", this does not prevent us from understanding XRP and the business model of Ripple behind it. XRP ushered in a 30%+ rise after the news came out.

So, this article will explain initially what Ripple and XRP are, their relationships, and how they work in Web2 and Web3. This project that combines Web2 and Web3 business models is worth learning from in the industry, especially in the context of Crypto Mass Adoption that everyone is talking about, many things that need to be implemented through the Web2 model, while combining Web3's advantages in the ecological network.

1. RippleLabs - a financial technology company

Ripple is a financial technology company based in the United States, also known as Ripple Labs. It focuses on providing solutions for cross-border payments and financial settlement based on blockchain technology. Its core goal is to optimize the international remittance process in the traditional financial system through blockchain technology, improve the speed of global financial transactions and reduce costs. Ripple's main products and services include (i) cross-border payments and remittances through RippleNet, and (ii) the recently launched RLUSD stablecoin.

The technology based on blockchain mentioned above is the XRP Ledger network ledger that Ripple technology and services mainly rely on. This is an independent distributed ledger technology (DLT) used to record and verify transactions, and XRP is the native utility token running on this ledger. It is regarded as a traditional financial institutionA replacement for the SWIFT payment network used.

XRP Ledger or XRPL is a payment-focused blockchain network developed by Ripple in 2012, enabling financial institutions and payment providers to provide innovative financial services, including custodial services, digital crypto wallets and other decentralized applications (DApps).

After the first release of XRP Ledger ledger, Ripple focused on helping financial institutions handle cross-border remittances and payments through blockchain distributed ledger technology. In addition to the XRP Ledger ledger and XRP native tokens, Ripple has developed a variety of cross-border payment products over time. Since these developments, the team has integrated them all into a top-level service called RippleNet.

RippleNet is one of Ripple's many products. Although Ripple has developed various financial products aimed at leveraging XRP Ledger and XRP over the years, it eventually renamed many of these ideas to a brand: RippleNet, a global payment network that connects banks, payment service providers and other financial institutions, providing real-time settlement and currency exchange services.

2. XRP Ledger - Blockchain ledger network

As early as 2011, Jed McCaleb began to develop a new digital currency consensus network, and in 2012 contacted Ryan Fugger (the founder of the peer-to-peer debt payment network RipplePay (now Ripple Payments)) to further reiterate this concept that Ryan Fugger has been developing since 2004. After discussions with the community, Ryan Fugger handed over the platform to Jed McCaleb, which changed the project to Ripple. The XRPL ledger was created in 2012 with further efforts from Jed McCaleb, Arthur Britto and David Schwartz.

XRP Ledger Ledger is a blockchain-based payment protocol used to facilitate cross-border payments and central bank digital currency (CBDC) management. Contrary to most blockchains, XRPL ledgers do not use Proof of Work (PoW) or Proof of Stake (PoS)Consensus mechanism. The network relies on a Cobalt-based consensus mechanism, a Byzantine Fault-tolerant (BFT) governance framework for open networks, and a Ripple protocol consensus algorithm.

XRP Ledger provides low transaction costs and high performance, and its native token, XRP, is classified as a payment cryptocurrency. These tokens provide a way to use a distributed network instead of centralized storage and transaction value. In this way, the main purpose of XRP is to act as a payment medium for transaction fees on XRPL.

Short after the launch of the XRP Ledger network, Jed McCaleb and Arthur Britto co-founded a company called NewCoin with Chris Larsen, which eventually changed its name to OpenCoin and then to Ripple Labs Inc. After the new company was established, the entity received 80 billion XRP (80.00% of the initial total token supply). The following year, Jed McCaleb left Ripple and later founded Stellar.

3. XRP - native token

XRP is a crypto asset in the XRP Ledger ledger book and is also a native token of the XRP Ledger ledger book. The main role of XRP provides faster and lower cost global payment solutions than traditional financial systems.

XRP is relatively independent and does not rely entirely on Ripple. XRP Ledger is maintained by independent verification nodes around the world (such as universities and exchanges). Ripple only holds a large amount of XRP and participates in technology development. Even if Ripple goes bankrupt, XRP can still exist. This independence also provides greater scalability for XRP, thus building a financial payment ecosystem based on XRP. For example, DeFi and tokenization: XRPL supports the issuance of stablecoins, NFTs and other assets (such as CBDC); independent payment tools: users can directly use XRP to make point-to-point transfers without going through RippleNet.

(https://x.com/meandivergence/status/1391416092229349379)

So, the value of XRP is not directly related to the success or failure of Ripple Labs, and vice versa. Likewise, Ripple can't limit anyone to use it for its own services through the XRP Ledger network, although Ripple's holding of so much XRP may limit any competition.

Ripple is committed to improving global payment systems through its technology, and XRP is one of the key tools to achieve this goal.

In short, Ripple is a private company providing financial payment services, while XRP is the company's native cryptocurrency in the blockchain network to support fast and low-cost cross-border payments.

It is worth noting that Ripple is not as decentralized as other public blockchains and holds a large number of XRP tokens. On the contrary, Ripple is a for-profit entity that provides services to financial entities. It initially developed the XRP Ledger ledger and served as a core contributor to the XRP network. At the same time, the Ripple team holds most of the XRP tokens.

(XRPL.org)

The core role of XRP is the bridge currency for cross-border payments. In Ripple's ODL (On-Demand Liquidity) solution, XRP serves as an intermediate medium to replace the "pre-deposit pool" in the traditional agency banking system. For example:

Bank of America converts US dollars to XRP → XRP to Mexico →Bank of Mexico converts XRP to peso.

In this case, XRPL's consensus mechanism (non-proof of work) ensures that transactions are confirmed within 3-5 seconds, much faster than Bitcoin (10 minutes) or traditional banking systems, and avoids capital occupation and exchange rate risks caused by currency pre-deposit, and has extremely low transaction costs.

4. RippleNet - Global Payment Network

RippleNet is a global financial payment network built by Ripple. It aims to connect banks, payment service providers, remittance companies and other financial institutions to optimize cross-border payment processes. It is not a public network based on blockchain, but a privatized enterprise-level solutionThe case mainly solves the efficiency of traditional financial systems.

(SWIFT vs. Ripple–the fight for better, faster, cheaper bank transfers)

RippleNet uses blockchain technology to provide financial institutions around the world with the goal of establishing a unified global payment system. There is no unified global payment system in traditional finance, but various financial institutions have established isolated transfer systems to make international payments. These systems cannot interact well, and international payments through the above systems are both expensive and time-consuming.

In today's internationally connected world, this outdated payment system seems out of place. Despite the high fees, users of all kinds still have to wait weeks to complete payment, which limits the number of users entering the international market.

RippleNet aims to solve these problems by providing a decentralized global banking network for everyone. Connecting to the network through an application programming interface (API) allows users to transfer funds internationally faster and cheaper than traditional methods. The decentralized network claims to process payments in just three seconds, leveraging the global reach of its XRP tokens.

Technically, RippleNet is a group of products that utilize the functionality of the XRP Ledger blockchain network, rather than a standalone blockchain. That is, all transactions made using RippleNet products are recorded on the XRP Ledger blockchain, but this does not mean that RippleNet itself is a blockchain.

Not only that, RippleNet also solves the need to inject pre-investment of accounts in cross-border fund transfers through the On Demand Liquidity (ODL) solution. The service uses XRP tokens to obtain liquidity. RippleNet supports nearly 100/regions and pairs with over 120 fiat currencies, ensuring that countries can easily pay each other.

RippleNet core functions and features:

Real-time settlement: Traditional cross-borderOnline payment relies on the agency banking network and needs to go through multiple transit banks (it takes 1-5 days), while RippleNet can complete transaction confirmation in a few seconds through direct point-to-point communication.

Unified standards: Provide standardized APIs and protocols (such as ILP, Interledger Protocol) to enable different financial institutions to seamlessly connect and eliminate format and compliance differences.

Multi-currency support: supports instant exchange of fiat currencies, cryptocurrencies and even commodities (such as gold), without the need for intermediate currencies (such as US dollars) as bridges.

Reduce costs: By reducing intermediate links and liquidity pre-assembly demand, reduce cross-border payment costs up to 60%.

RippleNet is further subdivided into several key products: xCurrent, xRapid and xVia.

4.1 xCurrent

xCurrent focuses on banks and provides cross-border payments to banks at lower costs than traditional international settlements. Banks access through an application programming interface (API), which can convert traditional payments into an XRP-enabled blockchain alternative.

xCurrent is designed to adapt to the bank's existing compliance and risk capabilities and simplify the installation process. The xCurrent documentation states that the solution complies with all current requirements such as Know Your Customer (KYC) and Anti-Money Laundering (AML).

4.2 xRapid

If xCurrent provides cheap and fast cross-border payments, xRapid ensures that customers can obtain liquidity through XRP tokens. Traditional financing methods require companies to inject capital into their accounts in advance abroad, because it can take weeks to convert one fiat currency to another.

xRapid provides near-instant conversions, freeing up liquidity, also known as on-demand liquidity, and eliminating the need for companies to provide funds to foreign countries in advance, but keeping funds in their own accounts.

4.3 xVia

xVia is the API part of Ripplenet, ensuring that customers can easily connect to the above services. xVia supports sending payments with details, while attaching invoices and other details. According to the RippleNet documentation, other benefits of RippleNet include supply chain payment management, international bill payments, real-time remittances, peer-to-peer payments, cash pools and global currency accounts.

(Why the Momentum for Ripple XRP『s Use Case Continues to Gather Pace)

RippleNet's operation process (taking cross-border remittance as an example):

Initiator: Bank A (USA) initiates a transfer request to Bank B (Mexico) through RippleNet.

Routing and Verification: RippleNet automatically selects the optimal path (such as direct connection or through a liquidity provider).

Closedown: If ODL is used, Bank A converts the US dollar to XRP and sends it to Bank B, which immediately converts XRP to Mexican peso.

Completion: The funds arrive in seconds, and both parties do not need to pre-deposit each other's currency.

4.4 Who is using RippleNet?

While Ripplenet claims to be a global operating organization, one may wonder how many banks use Ripplenet. This includes more than 300 financial institutions around the world, including Santander and SBI Remit.

(Ripple Digital Asset Report: XRP Review And Investment Grade)

Ripple notes that hundreds of banks are using their services, from small entities to global institutions. For example, Bank of America, Santander and American Express are all large groups that use Ripplenet services. Santander is a company that handles more than 450 million euros of funds through RippleNet in six Europe and the United States. 5. The role of RLUSD stablecoin

5.1 stablecoin

Ripple is at the forefront of financial innovation, not only creating compliant, scalable and enterprise-level solutions, but also connecting traditional finance with digital assets through its recently issued RLUSD stablecoin. The launch of RLUSD stablecoin, with a focus on regulatory compliance, brings opportunities for customers and users to benefit from the stability and transparency that Ripple offers uniquely, marking an important milestone in Ripple's journey to build the next stage of global financial services and to support the Internet of Value.

RLUSD will seamlessly integrate XRP Ledger and Ethereum networks to build the underlying assets of additional blockchain solutions for enterprises. It provides a secure, fast and scalable infrastructure for stablecoins and has the capabilities to support issuance, transactions and payments:

Native stablecoin support: XRPL natively supports stablecoins without complex smart contracts.

Automatic bridge and DEX integration: Stablecoins on XRPL benefit from deep liquidity and seamless forex swaps.

Institutional DeFi applications: RLUSD and other stablecoins can be used for lending, tokenized RWA and cross-border settlement.

(Chainlink partnership brings RLUSD utility to DeFi; Source: Chainlink)

This integration enables Ripple USD stablecoins to work in many areas:

Filipino to cryptocurrency gateway: making it easier for users, traders and businesses to go to fiatConvert between currency and cryptocurrency.

Global remittances: Fast and affordable international transactions used by individuals and businesses.

Daily Trading: a reliable way to trade everyday, a cash or card alternative.

RWA Tokenization: Staking support for tokenized assets on XRPL and transactions involving them.

DeFi integration: Users can use RLUSD to trade, earnings farming, pledge and as loan collateral in XRPL and Ethereum dApp and DeFi platforms.

5.2 The significance of RLUSD

Ripple's launch of the stablecoin RLUSD is an important step in its strategic layout, aiming to consolidate its leading position in the field of cross-border payments and expand its broader financial ecosystem. With the rapid expansion of the global stablecoin market, the launch of RLUSD directly responds to the demand for low-volatility encryption tools from financial institutions. Although XRP has speed and cost advantages in cross-border settlement, its price volatility remains a concern for some conservative institutions. RLUSD is collateralized with 1:1 USD reserves and short-term Treasury bonds, providing compliant and stable settlement options, complementing XRP, allowing RippleNet users to flexibly choose settlement methods based on their risk preferences, and further optimize capital efficiency and trading experience.

This move also reflects Ripple's active adaptation to the regulatory environment. Against the backdrop that the SEC's legal dispute against XRP has not yet been fully resolved, RLUSD attempts to circumvent potential compliance risks and maintain the trust of institutional clients through transparent audits and designs that comply with the U.S. regulatory framework. At the same time, Ripple positioned RLUSD as a multi-chain asset and plans to deploy it on public chains such as XRP Ledger and Ethereum, which not only enhances the cross-chain interoperability of its payment network, but also lays the groundwork for future participation in the central bank's digital currency (CBDC) and institutional-level DeFi market. For example, RLUSD may become a bridge connecting traditional finance with emerging scenarios such as on-chain treasury bonds and mortgage lending, helping Ripple seize the opportunity for compliance financial innovation.

From the perspective of market competition, RLUSD relies on RippleNet's existing more than 300 financial institution partners and has the advantage of rapid implementation. Compared with general stablecoins such as USDT and USDC, RLUSD is more specializedFocus on vertically integrating cross-border payment solutions, and use the low-cost and high-speed characteristics of XRPL to target high-frequency cross-border settlement scenarios. In addition, the launch of RLUSD is also seen as the key to Ripple's ecological expansion - by attracting developers to build stablecoin-related DeFi applications on XRPL, indirectly improving the practical value and on-chain activity of XRP, forming an ecological synergy effect.

However, this strategy still faces multiple challenges. Regulatory uncertainty (such as the advancement of the US Stablecoin Act), fierce competition with veteran stablecoins, and management pressures on transparency in reserve assets may all affect RLUSD's market acceptance. If Ripple can balance technological innovation, compliance requirements and customer needs, RLUSD may become the core pillar of its transformation from payment service providers to integrated financial infrastructure, but the realization of this goal will still take time and market verification.

6. Final summary

Ripple is a Web2 Fintech Fintech private company that launched the blockchain network of XRP Ledger, which is the native token of the network. Ripple's technical basis is XRPL ledger, a distributed ledger technology, and XRP is the utility token running on this ledger.

At the same time, Ripple has integrated its cross-border payment solutions accumulated over the years and launched a payment solution for financial institutions called RippleNet, with the core of improving efficiency and reducing costs. Some of RippleNet's services are implemented through XRP Ledger's blockchain network.

XRP is an independent cryptocurrency that acts as an efficient bridge currency in RippleNet, but its value and application scenarios far exceed Ripple's business scope. The relationship between the two is similar to "RippleNet" and "Fuel (XRP), but XRP can also be used separately in other scenarios.

The launch of RLUSD is regarded as the key to the expansion of Ripple's ecosystem - by attracting developers to build stablecoin-related DeFi applications on XRPL, indirectly improving the practical value and on-chain activity of XRP. At the same time, RLUSD can also be expanded outside the XRP ecosystem to form ecological synergy effects.