XRP Focus Report

Understanding XRP: Utility, Adoption, and Growth Trajectory

Developed by Ripple Labs to facilitate fast and cost-efficient cross-border payments, XRP is the native digital asset of the XRP Ledger. XRP was launched in 2012, utilizing a unique consensus protocol that allows for rapid settlement of transactions. Over the years, XRP has managed to attract significant attention from financial institutions, investors, and retail users alike.

Key Takeaways

• XRP is the native token of the XRP Ledger (XRPL), serving as a bridge currency to enable fast, low-cost cross-border transactions and efficient liquidity between diverse fiat pairs.
• At Q4 2024’s close, XRP became the fourth-largest crypto by market cap at $119.5 billion, with a 246% QoQ increase, a 241% price rise, and a 1.6% supply increase, surpassing the 44% combined growth of BTC, ETH, and SOL.
• XRP enables near-instant settlement and minimal fees, making it optimal for real-time global payments.
• XRPL features integrated support for a decentralized exchange (DEX) and native asset issuance, including stablecoins and CBDCs, expanding its functionality beyond basic transfers.
• Biyond head trader Nathan Batchelor believes XRP remains strong, with a long-term target of $6.

Technical Foundation

XRP operates on the open-source and permissionless blockchain, the XRP Ledger (XRPL), where a consensus algorithm that differs from the more commonly known Proof of Work (PoW) and Proof of Stake (PoS) mechanisms is employed: Proof of Association (PoA), formerly known as Federated Byzantine Consensus Protocol. Instead of financial incentives, the PoA consensus mechanism relies on trust-based validation, or, more precisely, trusted nodes known as Unique Node Lists (UNLs). Nodes operate on the open-source rippled software, with validators not receiving financial incentives. Instead, their engagement and motivation are driven by the objective of supporting network decentralization.

The Ripple Ledger reaches consensus every 3-5 seconds, through a process that requires 80% agreement amount participants for block finalization. It’s important to note that arbitrary smart contracts are not supported in PoA, a design choice aimed at ensuring greater security and system stability. However, plans to introduce native smart contracts were announced in September 2024, alongside long-standing initiatives to introduce advanced scripting functionality through solutions like Hooks.

XRPL features deterministic transaction fees, which corresponds to around 10 drops per transaction (a drop is a millionth of an XRP), and can support up to 1,500 transactions per second (TPS).

XRPL functions with a built-in decentralized exchange (DEX) that facilitates the trading of digital assets directly on the ledger without any intermediaries involved. Automated Market Makers (AMMs) on the XRP Ledger’s DEX provide liquidity through pools of two assets, allowing users to swap between them at rates determined by a mathematical formula. The XRPL also supports the issuance of new tokens, enabling various use cases, including stablecoins and central bank digital currencies (CBDCs).

Milestones and Significant Events 

The key milestones and significant events for XRP since its launch include:

• 2012: The XRPL is created and 100 billion XRP tokens are issued.
• 2014: XRP becomes the second largest cryptocurrency by market capitalization for the first time.
• 2015: Ripple Labs is fined by the US Treasury’s Financial Crimes Enforcement Network (FinCEN) for operating as a money services business without registering with the agency.<meta charset="utf-8" />
• 2018: Ripple’s On-Demand Liquidity (ODL) service is launched, where XRP is leveraged to facilitate cross-border payments without the need for pre-funded accounts; A Japanese banking consortium led by SBI Ripple Asia launches “MoneyTap,” a Ripple-powered mobile app enabling real-time domestic payments across Japan; Spanish banking group Santander introduces One Pay FX, the first mobile app for international payments powered by Ripple’s xCurrent technology.
• 2020: Ripple places approximately 55 billion XRP into an escrow account to provide predictability to the XRP supply; The US Securities and Exchange Commission (SEC) charges Ripple and two executives with conducting a $1.3 billion unregistered securities offering.
• 2023: A US district court rules that XRP is not inherently a security, though its legal classification may vary based on the manner in which it is offered or sold; The “Hooks” amendment proposal is introduced to add programmable functionality to the XRPL.
• 2024: Ripple Labs launches its USD-pegged stablecoin, RLUSD.
• 2025: Despite rumors that XRP would be included in the strategic reserve outlined in Trump's executive order, it is ultimately left out; Ripple Labs announces that the SEC dropped its appeal regarding the classification of XRP; Teucrium launches the first US-based XRP ETF, the Teucrium 2x Long Daily XRP ETF (XXRP), which seeks to deliver twice the daily return of XRP

Tokenomics & Financial Strength

A total supply of 100 billion XRP was pre-mined at inception, with no additional tokens to be created. Of the original 100 billion XRP, 80 billion was allocated to Ripple for the company to continue contributing code and services to the Ledger, and a total of 20 billion was allocated to the three founders, subject to various lock-up agreements.

XRP’s circulating supply is influenced by both inflationary and deflationary mechanisms:

• Inflationary: Monthly release of up to 1 billion XRP from escrow to increase circulating supply.
• Deflationary: Transaction fees are burned to permanently remove XRP from circulation, albeit at a slow rate.

Inflation mainly originates from monthly escrow unlocks, where unused portions are returned to escrow, resulting in an average inflation rate of around 5.4%. The deflationary aspect stems from the fact that no new XRP can be created, and some are continuously burned. Even though the overall supply is designed to shrink over time, the circulating supply will continue to grow until all escrows are released and founder distributions are fully completed.

Token Utility & Distribution Model

XRP has multiple use cases within the Ripple ecosystem:

• Bridge Currency: Facilitates cross-border transactions by bridging different fiat currencies.
• Transaction Fees: Used to pay for transaction fees on the XRPL, with fees being minimal and burned to decrease supply over time.
• Wallet Reserve: Creating a new wallet on the XRPL requires a 10 XRP reserve, which is returned if the wallet is deactivated.
• Trust Line: Setting up a Trust Line (which lets users hold or send other assets like stablecoins on the XRPL) needs a 2 XRP reserve, which is released when the Trust Line is terminated.
• Collateral: Potential use in DeFi applications as collateral for loans and other financial instruments.

Liquidity & Market Positioning

XRP is listed on numerous exchanges, including Binance, Coinbase, and Kraken, facilitating broad accessibility for both retail and institutional investors. 

In 2024 Q4, XRP’s market capitalization surged by 246% QoQ, significantly outpacing the combined 44% increase in the market capitalization of BTC, ETH, and SOL.

XRP’s trading volume surged dramatically in November 2024, averaging $5 billion on a daily basis, marking a substantial increase from the previous month’s $500 million daily average. December 2, 2024 was a record-breaking day with nearly $25 billion in spot volume traded across top-tier exchanges. The surge was largely attributed to renewed investor confidence following favorable regulatory developments as well as increased institutional interest.

The proportion of USD and USD stablecoin volume traded through fiat pairs rose from 14% in Q3 to 25% in Q4. Most XRP trading activity remains focused on USDT pairs.

XRP’s circulating supply saw a modest increase of 1.6% in Q4 2024, while its market cap rose by 246%. 

In Q4 2024, XRP’s liquidity has grown significantly, with an increase of 1,140% in average daily CLOB volume and a 3,100% increase in AMM volume. XRP’s position in the market has strengthened with the launch of real-world assets (RWAs) and the rise of DeFi on the XRPL. The market cap growth and the addition of XRP trading on platforms like Robinhood and Bitwise’s XRP ETP in Europe also contribute to its liquidity and market positioning.

Market Potential & Competitive Landscape

While XRP competes with other digital assets like Stellar (XLM) in the broader cryptocurrency landscape and traditional systems such as SWIFT, its unique consensus mechanism, which enables faster settlement without energy-intensive processes, provides a distinct advantage. Furthermore, the favorable regulatory environment in the US, i.e. pro-crypto policies and leadership changes within the SEC, has further strengthened XRP’s market position. 

Target Market & Adoption

The primary target market of XRP includes financial institutions, payment providers, and remittance services. The fact that it can facilitate near-instant transactions with minimal fees makes it attractive for banks and payment processors aiming to enhance their international payment infrastructures. 

XRP has also gained traction in emerging markets, offering a viable alternative for remittances and financial inclusion. The significant increase in new addresses in Q4 2024 (382% QoQ) and active addresses (99% QoQ) indicates growing adoption.

 

On-Chain Activity in Q4 2024

Despite a slight 2.86% drop in transaction count to 167 million, the XRPL saw increased activity across key on-chain metrics, with AMM swaps reaching $774.15 million in Q4, up from $31.23 million in Q3, driving DEX trading volume to $1 billion in Q4, with AMM swaps accounting for 77% of the total. XRP’s price surge and the strong adoption of First Ledger, a meme token creation and trading platform integrated with Discord, were key drivers behind this momentum.

Wallet creation rose to 709K, up from 140K in Q3, reflecting growing interest in the XRP Ledger, while XRP’s average closing price increased from $0.55 in Q3 to $1.43, peaking at $2.80, which led to a rise in network fees and a higher total of XRP burned from 592K to 724K in Q4.

Trust Lines grew from 7.3 million to 7.9 million in Q4, with 37K of the 600K new Trust Lines attributed to Ripple-issued RLUSD, reflecting its adoption and contribution to the expansion of the token ecosystem.

Industry & Geographic Focus

While XRP’s utility spans various sectors, the pronounced emphasis is on the financial services industry, with integration into payment systems and collaboration with banks and remittance companies. 

Geographically, XRP has a global focus, and significant partnerships are concentrated in North America, Europe, and Asia-Pacific. It also enjoys widespread adoption in Southeast Asia, Latin America, and Africa, where demand for efficient cross-border payment solutions is substantial.

XRP’s Competitive Advantage in the Market

XRP has a number of features that distinguish it from the competition.

• Speed and Scalability: One of the most prominent features of XRP is its transaction speed: XRP transactions settle in 3-5 seconds due to the PoA consensus mechanism, which has the following advantages:
• Lower hardware requirements reduce electricity and operational costs, making validators more affordable to run than PoW miners.
• Unlike PoS, block production isn’t directly influenced by which participant holds the most capital.
• There are no reorgs—once a block is validated, it cannot be changed.

Additionally, the Ripple network can process up to 1,500 TPS, and is built to scale beyond 50,000 TPS, positioning it among the most scalable payment networks in the crypto space.

• Low Transaction Costs: With fees as low as $0.0002/transaction, XRP has one of the lowest transaction fees in the cryptocurrency market, which makes it particularly attractive for cross-border payments, where traditional banking systems or other cryptocurrencies, such as BTC or ETH, may incur higher fees.
• Supply Structure and Utility: XRP has a fixed supply of 100 billion tokens, with the escrow mechanism ensuring a predictable supply schedule, where a set amount is released monthly and unused tokens are returned to escrow. This controlled distribution supports price stability and reduces inflation risk.
• XRP Serves as a Bridge Currency: Ripple’s RippleNet allows for quick, low-cost, and efficient cross-border transactions by utilizing XRP to bridge the value exchange between different currencies, eliminating the need for intermediaries in international payments.
• RippleNet and Institutional Adoption: As a decentralized network connecting financial institutions, banks and payment providers, RippleNet comprises over 300 financial institutions, offering a robust and diversified ecosystem that operates across international markets and multiple industry verticals. Notable partnerships include Santander, SBI Holdings and American Express.
• Versatile Developer Ecosystem: From micropayments to DeFi and NFT capabilities, the XRPL supports a broad range of use cases while offering robust support for developers in Python, Java, and JavaScript. With accessible tools and tutorials, it enables the creation of scalable, real-world solutions addressing inefficiencies in payments, remittances, and asset tokenization.

Challenges & Barriers

Despite having made significant strides in streamlining cross-border payments and improving liquidity, XRP still faces challenges that might influence the pace and scope of its adoption. Notable barriers include the following:

• Technological Integration: To get widespread adoption, XRP’s tech needs to be seamlessly integrated with existing banking infrastructure. While RippleNet and ODL have made it easier for many partners, legacy systems and risk-averse financial institutions remain a hurdle. Upgrading internal systems or adopting decentralized tech can be resource-intensive and time-consuming, slowing down institutional onboarding.

Additionally, one of the key concerns raised by some in the community is that even if XRP is adopted by banks, those institutions don’t necessarily have any obligation to XRP holders. This raises questions about whether the value lies more in Ripple’s enterprise solutions than in the XRP asset itself—especially since XRP is a token maintained and largely driven by the company, rather than being inherently tied to institutional incentives or obligations.

• Crypto Market Volatility: Although XRP is positioned as a utility token for real-time liquidity, its exposure to overall crypto market volatility can scare off conservative financial institutions from full implementation. To mitigate this, Ripple has explored liquidity hubs and enterprise-level custody solutions to reduce XRP’s market exposure during transactions. Still, some argue that unless XRP can decouple from broader crypto price trends, its role as a stable institutional bridge asset remains limited.

• Limited Retail Use Cases: XRP’s ecosystem has been enterprise-focused. Unlike Ethereum or Solana—which have thriving DeFi, NFT, and gaming ecosystems—XRP has limited mainstream use cases for individual users. This may limit broader community support or organic network effects. 

Nathan Batchelor’s Analysis

Nathan is a seasoned trader with experience across Forex, commodities, equities, and crypto since 2007. Now the Head Trader at Biyond, he previously led trading and research at SIMETRI and worked with hedge funds and proprietary trading firms. At Biyond, he combines his expertise with the Quant team to deliver accurate, insight-driven market commentary.

Short-term

XRP has recently ignited a head and shoulders pattern. The 8-hour time frame clearly illustrates this break in action. However, I believe it is likely to be a trap for bears. The major clue will be if Bitcoin holds the very important 73,000 support zone. This should generate a signal that alts are ready to rebound. 

A move back above the neckline of the pattern will be the second major clue that this is a false downside break.

Medium-term

In the medium-term XRP has been correcting slowly. Do note that even though XRP has been in correction mode it has still been far stronger than most alts and trading well above its historical mean price.

So far, we have seen a classic retest of the 0.61 Fib retracement from the recent high to the start of last year’s major move higher. As long as XRP holds above this Fibonacci level, then it really is just a classic bull market correction. Keep a close watch on the buying strength around XRP’s 200-day MA as well.

Long-term