- Regulatory risks limit XRPL DEX use in Ripple’s enterprise payment systems.
- XRP’s volatility and role as a bridge asset depend on holder participation and liquidity.
- Multiple stablecoins sustain need for neutral bridge tokens like XRP across jurisdictions.
More than a decade after Ripple began developing its payment solutions, on-chain volume on the XRP Ledger (XRPL) remains limited, despite over 300 reported bank partnerships.
A recent online exchange has reignited questions about the platform’s usage and the challenges tied to regulations and token volatility.
Why Ripple’s payment systems remain mostly off-chain
One of the main reasons cited for the low on-chain volume is regulatory uncertainty surrounding the XRPL’s decentralized exchange (DEX). According to industry discussions, Ripple has not integrated the DEX into its enterprise payment products due to the inability to fully screen liquidity providers.
The core concern for banks is that a sanctioned or illicit actor could provide liquidity on the permissionless DEX, posing a major risk under current compliance frameworks.
A proposed solution, such as “permissioned domains,” could help mitigate these risks in the future by enabling identity-based restrictions on liquidity providers. Until such features are implemented, however, most large-scale, XRPL-based payments may continue to operate outside the DEX environment.
The debate over XRP’s volatility and utility
Volatility also remains a key talking point for XRP adoption. While some argue that price fluctuations are a disadvantage compared to stablecoins, others highlight that volatility can be an advantage, particularly for users who anticipate upward price movements.
Related: XRP Ledger Sets New Record with 5.1 Million Transactions in 24 Hours
As a bridge currency, XRP’s functionality also requires a deep pool of active holders to support liquidity at the moment of transfer. This encourages some participants to maintain positions in XRP, as it can be used to facilitate rapid conversions between less-liquid assets, which remains a core part of its value proposition.
Stablecoins, Tokenization, and Platform Choice
Questions have also emerged about the long-term necessity of bridging assets like XRP in an increasingly stable coin-driven environment. If a single stablecoin were to dominate global usage, bridge assets might be redundant. However, multiple stablecoins tied to different jurisdictions make a neutral bridge token useful for connecting otherwise siloed financial systems.
Observers point to existing examples of enterprise use, such as tokenization of real-world assets, like Circle’s USDC deployment across multiple chains. XRPL’s neutrality and open participation model distinguish it from enterprise-controlled blockchains.
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