Author: Peyton, Core Builder of LYS Lab

In the past week, major media platforms have exploded due to the XRP market The screen was frequently refreshed, with an increase of about 400% in a single month, and multiple good news followed:

Macroscopically: regulatory relaxation and rent-seeking

Environment: In November, Trump, who advocates encryption friendliness, was elected as the 47th President of the United States and planned to establish a cryptocurrency advisory committee. Ripple is actively seeking a seat on this committee. In addition, Ripple donated US$25 million as early as December 2023 to establish a super action committee called Fairshake, demonstrating its strategic foresight in rent-seeking and compliance layout.

Regulatory changes: In the same month, current SEC Chairman Gary Gensler revealed his intention to resign before Trump takes office. The new SEC Chairman’s tendency is highly anticipated by the market.

Judicial developments: There are also positive developments in Ripple-related litigation. Judge Phyllis Hamilton approved the final judgment on the settled class action case and stayed the processing of other pending cases. . The decision clears the way for the upcoming trial on January 21, 2025 and boosts market confidence.

Micro: Institutional cooperation and product expectations

Stablecoin products: November, New York The Ministry of Financial Services has preliminarily approved Ripple's launch of the stablecoin RLUSD, which is scheduled to be officially launched on December 4. (However, Ripple later announced on December 5 that it was delaying the launch.)

Institutional cooperation: In late November, Ripple announced a partnership with Archax and British asset management company ABRDN PLC Reached cooperation to launch the first tokenized money market fund on XRP Ledger.

ETF applications: As of early December, multiple institutions, including Bitwise, Canary, 21 Shares and Wis.domTree has successively submitted applications for spot XRP ETF, injecting more imagination into the market.

As of December 8, 2024, XRP is currently trading at $2.55, having yet to regain its 2018 all-time high of $3.84. This writer is deeply interested in XRP’s massive rise. Looking back at history, XRP has repeatedly jumped to become the third-largest crypto asset by market capitalization. Can this market situation last? Is there still an opportunity to get on board in the market outlook? Focusing on these issues, this article will try to conduct a brief analysis of XRP in order to provide a reference for investors.

Research Objectives

This article attempts to study and answer the following main questions:

Ripple’s business model and Its impact on XRP valuation: What is Ripple’s business model like? Does this business model play a role in XRP’s valuation logic? What is its team and financing background?

The current development status of XRPL: How is XRPL developing? What are its characteristics compared to other public chains? How is the current on-chain data? What are the narratives and future developments of XRPL worth looking forward to?

XRP’s economic model and token valuation: What are XRP’s economic model, token utility and valuation levels? Finally, based on the answers to the previous questions, let’s explore whether XRP’s rise is likely to continue and what resistance it faces?

Ripple: Global cross-border payment network company project positioning

Crypto Solutions for Business

Ripple（ Ripple) is a global cross-border payment network created by Ripple Labs. It is based on distributed ledger technology and aims to provide secure, instant and virtually free global financial transaction solutions. As a leading provider of digital asset infrastructure, Ripple is committed to helping the financial services industry modernize financial infrastructure. Through the Ripple platform, users can not only make real-time cross-border payments, but also participate in tokenization and digital asset transactions while ensuring compliance with relevant regulatory compliance requirements.

Team Background

Brad Garlinghouse is the CEO and board member of Ripple. existPrior to joining Ripple, he served as CEO of file collaboration platform Hightail, president of consumer applications at AOL, and held various senior positions at Yahoo.

Chris Larsen is the co-founder and executive chairman of Ripple and currently serves as an advisor to the data science company Distilled Analytics. Before founding Ripple, he served as CEO of P2P lending platform Prosper and led online lending company E-LOAN.

David Schwartz is the chief technology officer of Ripple and the chief architect of XRP Ledger. The outside world calls him "JoelKatz". Before that, he was CTO of WebMaster Incorporated, a Santa Clara-based software company, where he developed encrypted cloud storage and enterprise messaging systems for CNN, the NSA and others.

Monica (Appelbe) Long is the President of Ripple and previously served as Senior Vice President of Marketing and General Manager of RippleX. She has spent her career driving technology companies to drive deep change in the financial industry, working in corporate communications at Intuit and supporting clients across multiple disciplines.

Stuart Alderoty is Ripple’s Chief Compliance Officer and has over 30 years of legal experience, specializing in financial services and regulatory matters. He has held leadership positions at CIT Group and HSBC North America Holdings and has provided legal counsel to American Express.

Financing background

Ripple is a private investment company. The company has completed five funding rounds, including two angel, one seed, one Series A, one Series B and one Series C. See the table below for details:

Development History

It is worth pointing out that Ripple has faced multiple investigations and lawsuits from regulatory agencies, such as being fined for unauthorized sales of XRP in 2015, and the SEC in 2020 accusing it of issuing securities without registration.

These challenges not only consume a lot of resources (more than US$100 million in legal fees), but also drive Ripple to adjust its operating model and compliance strategies (such as obtaining BitLicense and Singapore Central Bank licenses) , prompting it to seek to promote regulatory Changes (such as donating to a super action committee called Fairshake)

Business Model and Product Matrix

Ripple requires people to obtain permission to use, which means using the blockchain. Mainly banks and financial institutions. The goal here is to provide financial institutions with a way to transfer money internationally without using the SWIFT system.

Ripple. The products listed on the official website include: direct payment, on-demand payment, asset custody and stable currency. Among them, only on-demand payment ODL may be attractive to C-side individuals.

Direct Payment (Direct)

In this product, Ripple is responsible for paying beneficiaries, managing payment partners, and Partners provide funds and pay fees in exchange for payments to beneficiaries

The entire payment process is shown below:

The sending customer (node ​​1) enters payment information in the Ripple Payments UI.

The intermediary Ripple (node ​​2) verifies the transaction. If risk and compliance The checks are successful and Ripple will approve the transaction

The payment partner (node ​​3) now verifies the transaction. If their compliance check is successful, they will approve the transaction.

XRP will be transferred and converted to the currency of the destination country, distributed by the payment partner

Payment partners complete payments by sending funds to the payee.

Special Note: After setting up Ripple as a payment provider, customers no longer need Buy, Sell or Own XRP!

Pay on Demand (ODL)

ODL, full name On-Demand Liquidity, ODL uses XRP. As a transitional currency, it can obtain liquidity on demand and transfer funds in real time. This product is still mainly for ToB, but it may also attract some C-side individuals.

ODL. The user interface is based on the peer-to-peer distributed application RippleNet, which maintains a virtual ledger to simulate Nostro and Vostro accounts and relationships, consisting of a two-way messaging layer and a settlement layer. RippleNet can be integrated with the payment system using some API operations. API The operation copies funds to a RippleNet virtual account, rather than accessing the financial institution's core banking system

RippleNet can be accessed using Ripple's ODL (On-Demand Liquidity) product. Liquidity on the XRP ledger. RippleNet is deployed in a Ripple-hosted cloud environment and does not require customer maintenance.

Take personal payment as an example. The payment process is as shown below. Display:

Ripple deposits XRP into the sender's designated wallet

The sender uses RippleNet API operations to retrieve and accept the offer.

RippleNet transfers XRP from the sender's wallet to the recipient's wallet.

RippleNet transfers XRP from the sender's wallet to the recipient's wallet.

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Payee pays fiat currency to payee.

Receiver liquidates XRP into fiat currency.

Ripple A summary of the invoice issued to the sender for initiating payment.

Asset Custody

Ripple Custody is described as used for protection, transfer and Critical software infrastructure for settling tokenized financial assets. This product is mainly targeted at enterprise-level users.

The integration of XRPL tokenization capabilities enables businesses using Ripple Custody to handle a variety of assets, including cryptocurrencies and fiat currencies in addition to real-world assets . It also facilitates the issuance and secure transfer of digital assets from the platform while providing access to the XRPL decentralized exchange for efficient trading of tokenized assets.

Stablecoin (RLUSD)

In April this year, Ripple first announced plans to launch RLUSD .

In June, Ripple acquired Standard Custody & Trust Company, a limited purpose trust company chartered by NYDFS.

In August, Ripple began beta testing RLUSD on XRP Ledger and the Ethereum mainnet. At the time, the company also announced plans to expand the stablecoin to other blockchains. In a statement, Ripple said: “There is a clear need for stablecoins that provide trust, stability and utility. Once RLUSD is available, Ripple will use RLUSD and XRP in its cross-border payment solutions for its global customers. Provide services and significantly improve their experience 》

In October, Ripple announced that it had partnered with top exchanges to provide RLUSD to users. This includes Uphold, Bitstamp, Bitso, MoonPay, Independent Reserve, CoinMENA, and Bullish. And its liquidity is backed by Marketplace B2C 2 and Keyrock.

At the end of November, Fox Business reported, citing people familiar with the matter, that the stablecoin would receive approval from the New York Department of Financial Services (NYD)FS) and could be ready for launch by December 4.

According to its official documentation, the RLUSD stablecoin contract is planned to be deployed on XRP Ledger and Ethereum.

In terms of the stability mechanism, each RLUSD token is backed by U.S. dollar deposits, U.S. bonds and cash equivalents. Ripple has committed to releasing monthly third-party audit certifications of reserve assets conducted by accounting firm BPM.

Value Decoupling

Is the value of XRP really linked to Ripple’s core product?

Let us review Ripple's current product architecture:

Ripple Payments Direct : According to official documentation, customers are not required to buy, sell or own XRP. The author believes that this means that all good news related to this business (such as cooperation with XX bank, XX company, etc.) have nothing to do with XRP tokens.

Ripple Payments ODL: ODL uses XRP as a bridge currency to obtain liquidity on demand and transfer funds in real time. In this scenario, XRP is used as a medium for fund conversion, involving buy and sell operations of XRP, and it seems possible that there may be some buying support for XRP. However, according to data from Ripple’s historical quarterly reports compiled by the author, the result of the ODL business is a net sale of XRP tokens, and the amount of XRP sold in the business is often higher than the amount of XRP repurchased. In addition, a 2020 Shenzhen Chao article analyzed that "actually it (referring to ODL) costs much more, so institutions do not want to use this product without substantial compensation from Ripple." "Currency payment institutions have become the future of Ripple sales. Another channel to register XRP.”

Ripple USD (RLUSD): Among cross-border payment solutions, customers should be more inclined to choose RLUSD after its launch in order to reduce exchange losses. The stablecoin RLUSD as a payment solution makes it harder to believe that the launch of this business can empower XRP.

Note:

ODL-related sales include XRP sales supporting ODL (including credit lines) and critical infrastructure partners;

Net ODL related sales = XRP total sales - XRP total buyback;

Ripple seems to be limited to ODL business data will be announced during the 2020Q2-2023Q1 time period. In 2023Q2 and beyond, only the total amount of XRP tokens held by Ripple and the total amount of XRP tokens in the custody account will be announced.

To sum up, the author believes that at this stage, Ripple's core business logic does not seem to provide much buying basis for XRP, and Ripple is actually using account custody and ODL XRP is released through business and other channels, so Ripple's various business expansions cannot simply be regarded as good news for XRP tokens. Only those cooperations that actually plan to develop new businesses on the XRPL public chain are real good news. For example, in the last quarter. , Meld Gold announced its cooperation with Ripple to introduce fungible gold and silver assets to XRPL, which indeed enriches the types of assets on the chain and increases network transaction fees.

The problem of decoupling between team business and token value is actually widespread, and even appears in many well-known projects. For example, the UNI token before announcing dividends is an example, but the price trend of these tokens is still often affected by " On the surface, the impact of good news. Regarding this phenomenon, the author would like to put forward some crude opinions:

Explanation 1: If you believe that the market is not completely efficient and the participants are not completely rational, then Thanks to the close relationship between Ripple and XRP tokens in terms of publicity and corporate image, Ripple's official good news may have "misled" investors and increased the possibility of XRP's rise.

Explanation 2: If the market is considered efficient and participants are rational, then why does the price of XRP tokens rise? It may be that Ripple officials have provided certain financial support, talent support, etc. to relevant entities such as the XRPL public chain and foundation to be introduced below. Although these supports are unlikely to directly support the buying of XRP, in the long run, this will be beneficial to the XRPL publicThe ecological development of the chain is a good thing, which in turn is good for the XRP token. The market may have simply reflected this long-term benefit in the price of the XRP token in advance.

Both explanations are possible. In short, although Ripple's core business logic does not directly enable XRP prices to rise, it can play a supporting role through other channels. The author believes that the impact of Ripple's good news on XRP prices should not be underestimated.

XRP Ledger: ToB’s high-performance blockchain project positioning

Written on the official website of XRPL:

The XRP Ledger is a decentralized public blockchain built for business.

One ​​of the main advantages of the XRP Ledger is the fast and efficient consensus algorithm, which can 4 to 5 Settle transactions within seconds while processing at a throughput of up to 1,500 transactions per second, suitable for enterprise-level customers for daily payments and cross-border transactions and remittances.

Development History

Note: XRP Ledger client software was formerly called rippled, and is written here for convenience XRP Ledger.

The development history of XRPL reflects the balance between its technology orientation, market demand and decentralized ecological construction. It has gradually evolved from a basic payment solution into a multi-functional, open blockchain ecosystem with good industry adaptability and innovation capabilities.

Early stage (2012-2016): The establishment of system infrastructure, including basic functions such as deferred payment, escrow accounts and strict transaction control.

Mature stage (2017-2020): Introducing advanced features such asMulti-signatures, history sharding, account deletion and dynamic reserve adjustments make the system more efficient and adaptable.

Diversification stage (2021-present): supports NFT, automatic market maker (AMM), cross-chain bridge (XChainBridge) and decentralized identifier ( DID) and other functions, showing the trend of ecosystem expansion and diversification.

The main market-level applications currently supported on XRPL include:

Homogenization generation Coin standard and CLOB and AMM’s DEX;

Non-fungible token standard and NFT market;

Infrastructure such as XRP Sidechains, cross-chain bridges (XChainBridge amendments), price oracles, DID, and more.

It is worth pointing out that XRPL has a built-in CLOB DEX (Central Limit Order Book Decentralized Exchange), which is similar to other DEXs that use smart contracts to build DEX. Networks are different. The benefits of a native DEX are less trust assumptions and liquidity integration, rather than the vulnerabilities inherent in smart contracts. Although XRPL has only one CLOB, multiple marketplaces (also called gateways) provide access interfaces for users. These markets share liquidity and provide ordinary users with a convenient operating experience.

Technical Features

Trust line and reserve

On-chain homogeneity except XRP Tokens are stored in accounting relationships called “Trust Lines” that connect the accounts of two parties. All transfers of fungible tokens occur along lines of trust.

Each trust line is a two-way relationship, including:

Trust lines connect Identifiers for both accounts.

A single shared balance is positive from the perspective of one account and negative from the perspective of another account. The party with a negative balance is called the "issuer" and can control some properties of how these tokens behave.

Various settings andmetadata. Each of these two accounts can control their own settings on the trust line. Most importantly, each end sets a limit on the trust line, which is 0 by default. Generally speaking, the balance of each account (from a trustline perspective) cannot exceed the limit of that account, but trustlines can be created implicitly through certain transactions, such as when buying a token on a decentralized exchange.

Trust lines mainly prevent others from holding tokens they don’t want.

Since trustlines take up space in XRPL, trustlines increase the amount of XRP an account must retain. When an account has more than 2 trust lines, the trust line reserve may be charged.

This reserve requirement is intended to prevent junk data from filling the ledger. This data needs to be replicated across the network and maintained by all servers in the system. The base reserve (currently 10 XRP) dictates the minimum amount of XRP that must be sent when creating a new account; the owner reserve (currently 2 XRP per item) is determined based on additional objects held by the account in the ledger state data (e.g. quotes, trusts line and custody) to increase the account’s reserve requirements on a case-by-case basis. The current reserve requirement is effective as of the September 19, 2021 vote.

Rippling

Rippling occurs when addresses are linked by trust lines using the same currency code. For example, if Alice owes Charlie money, and Alice also owes Bob money, then the trust line is expressed as:

If Bob wants to pay Charlie $3, then he asks Alice to transfer part of Bob's debt to Charlie, represented by the trust line as follows:

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The process in which two addresses pay each other by adjusting the balance of the trust line between them is called "ripple settlement", in which two addresses pay each other by adjusting the balance of the trust line between them.

The No Ripple flag can be set on trust lines. When both trust lines have No Ripple enabled for the same address, payments from third parties cannot ripple through that address on those trust lines. This prevents liquidity Provider accidentally transfers balances between different issuers using the same currency code

Hooks

Although XRPL does not have a smart contract in the strict sense, the Hooks Amendment (similar to The Hooks function adopted in ETH's EIP, BNB's BIP, etc.) can affect the behavior and process of transactions with small and efficient code segments. These codes can execute logic before or after the transaction.

As of December 7, 2024, this amendment is still in the development stage and has not yet been launched.

Customized development. Side chain

For example, you can add a smart contract layer, add Ethereum Virtual Machine (EVM) compatibility, use custom ledger types and transaction rules, and more.

Incentive-free PoA consensus mechanism

One ​​of the main advantages of XRP Ledger is the fast and efficient consensus algorithm, which can run from 4 to Settle transactions in 5 seconds, while operating at up to According to XRPScan data, the actual TPS peak occurred on December 31, 2023, reaching 329.

XRP Ledger. of developers believe that Proof of Work (PoW) There is a waste of energy and is only really useful for initial distribution and resolving double spends. The core developers concluded that the real beauty of Bitcoin lies in the disclosure of transactions and state, rather than the PoW consensus mechanism, and they solved this problem by building an energy-efficient alternative XRPL. To challenge the dominance of PoW.

XRPL uses the Proof of Association (PoA) consensus algorithm - formerly known as the Federated Byzantine Consensus Protocol. Each node is required to set up a list of trusted nodes that it will rely on to reach consensus. This list of trusted nodes is called the Unique Node List (UNL).You cannot rely solely on financial means to gain access to the consensus process, you must first gain the trust of other nodes. Many nodes use one of the default UNLs to set up their own trusted nodes. The default UNL is the list of nodes recommended as trustworthy by the XRPL Foundation, Ripple, and Coil, but nodes can choose any list of validators they deem trustworthy.

During the operation of the network, each server will listen to the feedback of its trusted validators; as long as enough validators (more than 80%) agree When a certain set of transactions should be executed and the resulting ledger is correct, the server declares consensus. If consensus is not reached, validators will modify their proposals to be closer to those of other trusted validators and repeat this process for multiple rounds until consensus is reached.

In addition, unlike other decentralized ledgers, XRPL does not run validators Provide direct financial incentives for contributing to the consensus process. Other blockchains offer direct incentives, such as rewards for mining and staking or trading advantages. Instead, officials claim that “the lack of direct incentives for XRP Ledger validators attracts natural stakeholders.” (I will complain about this later.)

Compared with Proof of Work (PoW) and Proof of Stake (PoS), PoA has the following advantages:

The hardware requirements are lower, thereby reducing electricity and operating costs, making the cost of running verification nodes lower than PoW mining.

Block generation does not directly depend on the participant with the most capital, unlike PoS.

There is no reorganization (that is, the block is changed after verification).

In addition, PoA also has some potential disadvantages:

Since PoA does not require expensive External costs or locked-up capital, with a weak ability to financially punish bad actors.

Although it is possible to retaliate by cutting off validator connections or removing nodes from the UNL (Unique Node List), the attacker faces no financial loss.

The PoA implementation on XRPL is not as decentralized as the mainstream PoW or PoS chains in terms of block producing nodes. This may be because the PoA lacks financial incentives to participate.

Fees type

The fees on XRPL mainly include:

Transaction cost: A tiny amount of XRP is destroyed when a transaction is sent. This fee varies with network load.

Reserve requirement: The minimum amount of XRP that an account must hold. This amount increases with the number of objects an account owns in the ledger.

Transfer fees: Optional fee. A percentage fee that issuers can choose to charge when transferring issued currency to other addresses within the XRP Ledger

Trust line quality: Optional cost. Allows an account to set the balance on the credit limit above or below face value. This may result in a situation similar to the charging of fees.

On-chain data

XRPL’s current core business is still in homogeneous tokens and decentralized exchange-related services. Taking into account its public chain attributes, We can focus on observing the core indicators of total locked value (TVL), number of active traders, number of assets on the chain, market value of assets on the chain, number of trust lines, transaction volume, and transaction fees (network income).

For more detailed analysis, the author recommends further reading Messari's articles, which are carried on the deep tide: Messari XRP in-depth report: Q3 native smart contract proposal new high, daily trading Volume increased by 94% month-on-month - Shenzhen TechFlow(https://www.techflowpost.com/article/detail_22024.html)

Total lock-up value

The above figure shows the XRP lock-up since the beginning of 2024 The overall warehouse volume shows an increasing trend, reaching a peak of about 15M (15 million) around the beginning of November, and then lockedThe position has decreased (possibly because some LPs have cashed out and left), but still remains above 10M (10 million).

The lock-up amount in the AMM pool is much smaller. It has grown rapidly since late October, but it only reached 10K (10,000) on December 8, 2024. ) XRP around.

Number of daily active users

This refers to active (independent) accounts on the XRPL chain number.

As of December 8, 2024, XRPL’s latest daily activity reached a record high in early December The new high (note that this data in XRPScan has only been recorded since May 2022) is 105,956. Weekly activity in the new week has declined, but remains at historically high levels.

Daily transaction volume

As of December 8, 2024, the number of daily transactions on the XRPL chain has also remained at a high of around 2 million, but it is not as high as the peak of over 6 million in early 2024 (Messari analysts believe that this may be related to related to a surge in inscription activity starting in late 2023). Since XRPScan has recorded this metric since 2013, we can take another look at where these numbers fit into XRPL’s life cycle.

You can see the latest daily transactions of XRPL as of December 8, 2024 Overall, the number of transactions is still at a high level in the entire life cycle. In terms of peak value, the number of daily transactions of more than 6 million has exceeded the extreme value of about 5 million in the last bull market. In terms of trends, the number of transactions in this bull market is also about hundreds of thousands higher.

It is worth pointing out that during the bear market, the number of daily transactions of XRPL also maintained a certain level, and even intuitively was slightly higher than during the last bull market. It shows that the number of daily transactions of XRPL is generally not divided into bulls and bears, and maintains a gradual upward trend.

Daily trading volume

Because there are There are very large extreme values. The vertical axis in the above figure has been logarithmically smoothed. It can be seen that as of December 8, 2024, the XRPL trading volume remained between 1 million and 10 million US dollars during most of the period. time. 2024 After breaking through the $10 million mark at the end of November, it still remains

According to the picture above. You can clearly see the proportion of transaction volume between DEX and CEX. CEX has taken the dominant position almost instantly since the data was available in early August 2022. After that, CEX transaction volume still dominated most of the time period, including some time periods. DEX The short-term significant increase in share may be the result of the meme craze

Daily transaction fees

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As of December 8, 2024, transaction fees have remained in the thousands for most of the time XRP level, equivalent to the US dollar value at that time, the transaction fee is very cheap. The "spike" occurrence time period in the figure does not correspond to the occurrence time of the extreme value in the number of transactions. The specific reason is not yet clear to the author.

Token quantity

Starting from the end of October 2024 (near the end of the US election), the number of assets on XRPL began to increase dramatically, reaching 12,428 on December 8, 2024. During the rest of the period, the number of assets grows slowly.

Token market value

In terms of token market value, there was also a breakthrough at the end of October and early November (near the end of the US election). On November 2It briefly reached a historical peak of $393.96M on the 2nd. The figure on December 8, 2024 is $347.33M.

According to Messari's report, as of the end of the third quarter, the top tokens on XRPL ranked by market capitalization are as follows:

Sologenic ( SOLO ) has a market capitalization of $34.3 million and has 228,000 holders. SOLO is primarily used to pay transaction fees on the Sologenic gateway.

Bitstamp BTC ( BTC ) has a market cap of $12.5 million and has 4,500 holders. Bitstamp BTC is a wrapped version of Bitcoin offered by Bitstamp.

Gatehub Fifth ETH ( ETH ) has a market cap of $11.3 million and has 26,000 holders. Gatehub version 5 is a wrapped version of Ether provided by GateHub.

Coreum ( CORE ) has a market cap of $8.9 million and has 71,000 holders. CORE is the native token of the Coreum sidechain, also developed by the Sologenic team.

XRP: Economic Model and Valuation Level

The XRP token is the native token on the XRP Ledger (XRPL).

Economic model

Supply ceiling: 100B (100 billion).

Allocation ratio: 20% of the tokens are allocated to the three founders Jed McCaleb, David Schwartz and Arthur Britto, and 80% is allocated to what became Ripple.

Inflation mechanism: None. This means that the emission of XRP tokens is entirely determined by market supply and demand. Among them, Ripple is a giant, and its emissions (including custody lock-in and immediately available parts) are particularly worthy of attention.

Deflation machineSystem: Transaction fees will be destroyed. Nearly 13 million XRP have been destroyed since the network launched. Due to lower transaction fees, the destruction rate is lower.

Starting from Q1 of 2023, Ripple will announce the amount of XRP emitted in its quarterly report . The XRP owned by Ripple is divided into two categories: XRP currently available in its wallets, and XRP locked in ledger escrow. For the latter category, Ripple cannot directly access the XRP. This type of XRP has been discharged since December 2017. XRP that has not been purchased at the end of the month will be put back into the new smart contract.

Note: The total amount of XRP reduced = the total amount of XRP available in the wallet this quarter + The total amount of XRP locked in custody this quarter - The total amount of XRP available in wallets in the last quarter - The total amount of XRP locked in custody in the last quarter

As can be seen, in 23Q1-24Q3 During this time period, Ripple reduced its holdings of more than 800M (800 million) XRP tokens every quarter, and the value was almost more than 400M (400 million) US dollars.

In fact, you can start PoA again from here. Problems: the previous document claimed that "the lack of direct incentives for XRP Ledger validators attracts natural stakeholders" , and Ripple, as a highly controlled whale, sells XRP, acting as the inflation mechanism of the XRPL network in disguise, which is actually similar to PoW or PoS. The incentives given to validators in the consensus protocol are included in their own income, and there is no incentive for those validators who participate in network maintenance. This is not feasible from a purely commercial perspective.

Token utility

XRP has no special purpose. It is mainly used to pay various fees on the XRPL network, purchase various on-chain assets, etc., and act as a transaction medium.

Token Valuation

Select the competing product Stellar Network ($XLM) and apply the relative valuation method. Note that although the products of the two have certain similarities, there are still certain differences in terms of target customers, inflation mechanism, etc. XRP is designed to serve the needs of financial institutions, while XLM is designed to serve (especially those developinghome) for the needs of individuals and small businesses.

In terms of economic model, although Ripple’s XRP emission at this stage is essentially equivalent to the network inflation mechanism, there is no newly issued XRP, and the Stellar Network’s economic model , a small portion of the newly created XLM is distributed to incentivize participation in the network, forming slow inflation. In short, readers should note that the valuation here only has certain reference significance and may not be completely accurate.

Note:

In the table above, the annualized cost of XRP is calculated based on XRPScan's last month's cost data and the price data of CoinMarketCap and The Wall Street Journal. All other data come from Tokentermianl.

P/F is the FDV or MC divided by the annualized cost for the last 30 days.

It can be seen that compared to the competing product XLM, XRP has a lower PF ratio and a more cost-effective price. Based on the current XRP circulating quantity of 61,935,346,471 (XRPScan), the corresponding XRP token price can be calculated to be approximately $3.4957. This shows that, according to the valuation method here, there may still be some room for XRP’s market cap and price to rise at this time. Considering that the ATH of XRP price is $3.84, the valuation in this article may be relatively conservative.

Future Outlook

Ripple IPO expectations

On November 18, 2024, according to U. Today reports that SBI Holdings CEO Yoshitaka Kitao suggested that well-known enterprise blockchain company Ripple should consider preparing for an initial public offering after its legal issues with the U.S. Securities and Exchange Commission (SEC) are resolved (IPO).

Ripple CEO Brad Garlinghouse has previously mentioned that going public is not a top priority for the company. financial conditionas a reason for delaying the listing. However, he did not completely rule out the possibility of a future IPO. In 2022, Garlinghouse said that Ripple would explore an IPO after the SEC litigation was concluded and expressed Ripple's vision of eventually becoming a public company.

On December 4, 2024, "Barron's Weekly" reported that Trump is considering opening initial public offerings to cryptocurrency companies ( IPO) market has further opened up the market's imagination space for this.

As mentioned above, although Ripple's IPO business is not theoretically related to the value of XRP tokens, such positive market reactions have historically Look, it can be expected that positive news about Ripple's future IPO will briefly boost the price of the XRP token.

Institutional Adoption

Ripple’s initial strategy was to position itself as a mature player in the cryptocurrency space entity, to avoid association with the prevailing anarchist and liberal culture of the time. Ripple’s goal is not to replace the traditional financial system, but to improve the existing financial architecture by driving the adoption of XRP by fintech companies and banks. This strategy has always been at the core of Ripple’s market layout.

With the election of Trump as the 47th U.S. President and the loosening of the crypto regulatory environment, Ripple's long-standing compliance strategy and rent-seeking initiatives are expected to prompt XRPL gains greater institutional adoption. This trend is expected to bring benefits to XRPL including richer on-chain assets and more transaction fees, and further fuel expectations for the XRP token’s rise.

In addition, in late October, Ripple CEO Garlinghouse said in an interview with Bloomberg TV: "I think it is inevitable that the XRP ETF will be approved. ” He added, “There is very strong institutional and retail demand for this asset class.” As of early December, multiple institutions, including Bitwise, Canary, 21 Shares and WisdomTree, had submitted spot XRP ETFs. Apply to bring more imagination to the market.

Ecological expansion

The ecological expansion of the XRPL public chain can be viewed from two aspects. On the one hand, especially since 2020, the development of various applications on the XRPL chain has become more mature and perfect, and it is no longer just a simple transaction and transfer function. , This was also mentioned earlier.

On the other hand, XRPL is actively improving its interoperability with other blockchains. For example, 2024 1. XRPL launched in October The XChainBridge amendment in version 2.0.0 introduced the cross-chain bridge function. In addition, in the first quarter of 2024, the decentralized cross-chain communication network Axelar was integrated with XRPL, thus connecting the XRPL ecosystem with more than 60 zones. Blockchain network connections, including Ethereum and Cosmos ecosystems, with the development of XRPL chain AMM, Axelar’s ​​connections enable high TVL from multiple sources. The network has become more convenient to obtain liquidity.

Potential risks

Ripple's business logic is decoupled from the value of the XRP token

This problem has been mentioned before. Under optimism, it may not cause much problems in the short term, but under pessimism or a long-term perspective, this decoupling phenomenon may be amplified and create Adverse effects.

Historical issues in economic model and consensus mechanism design

As mentioned above, although under the PoA consensus mechanism, the scalability of XRPL is already strong enough , but there are still certain problems. At present, the substantial inflation mechanism of the XRPL network is more reflected in Ripple's continuous selling of XRP to the market as a "whale" or "bookmaker", rather than by rewarding validators like other blockchains. Incentivize network participation. This mechanism can easily lead to bearish sentiment in the market. Imagine if, as the price of Ethereum increased, we learned that the Ethereum Foundation or Vitalik kept selling ETH, this would obviously raise similar concerns. Although Ripple has set up an account escrow mechanism and publicly reports the amount of XRP it holds on a quarterly basis, this selling behavior has still been criticized from time to time.

Insufficient narrative logic to continue to attract C-end consumers

This is in line with Ripple and XRPL Positioning related. In a business model that is mainly ToB, how to maintainContinuously attracting retail investors or other on-chain users is questionable. The author noticed that the ecology and applications of XRPL are indeed gradually enriched, but there is still a certain gap in the experience compared to other chains. Let us wait and see whether we can attract more community members to participate in the future.

Summary

XRP has surged beyond many people’s expectations. The author admits that the XRP token does have some shortcomings - such as being regarded as an "old currency", Ripple's high degree of control, etc. - but one cannot ignore that a very important narrative logic of this bull market is institutions + compliance, and the Ripple has been working in this area for many years, and this round of rise can be described as "following the trend." Moreover, surprisingly, the XRPL chain is not an uninhabited dead chain, but its business model is a certain distance from ordinary retail investors, leading to deviations in public perception. Today, with the advent of the altcoin season, the author believes that XRP still has some room for growth.