Prominent Asset Manager Bitwise Investment addresses burgeoning concerns about XRP real use cases in the XRP ledger and Ripple ecosystem.
Wrathofkahneman (fok), an influential figure in the XRP community; Share It’s going to spin a little Report It highlights a “clear, concise, and relevant” explanation of the role of XRP in the Ripple ecosystem. This work in depth describes XRP as a digital asset and as a driving force for its value.
Three main features of XRP and their impact on evaluation
First, Bitwise highlighted the differences between XRP, XRP ledger, and ripple. For context, the XRP ledger is a blockchain with a proving consensus of authority and is built to enable quick and efficient payments.
Meanwhile, XRP is the native token of the XRP ledger, and Ripple acts as one of the contributors of the XRP ledger, leveraging the network and native token XRP in the cross-border payments business.
Furthermore, the film highlighted the three key roles XRP plays in the ecosystem and how it derives its value. First, as a native token in the XRPL network, users pay a fee for each transaction in their digital assets.
Surprisingly, the XRP ledger is programmed to consume realized transaction fees forever, effectively reducing the total supply of assets. At the time of reporting, the mechanism effectively incinerated 1385 million XRP, reducing supply to 9998.6 billion XRP. In particular, the annual burn rate for current transaction volumes is 0.0075% of the total XRP supply.
So, what will this cost XRP? With Q1 2025 transaction counts where XRP ledgers average 117 million per day, increasing numbers affect XRP burn rates.
Bitwise emphasized that a significant surge in the adoption of the XRPL blockchain makes burn rates more important. For example, if the volume grows 100 times, the annual incineration rate increases to 0.75% of the total supply of XRP, which can affect price in the long term.
Spam Protection and Bridging Utilities
Second, the report shared that XRP has utility as spam protection for XRP ledgers. To avoid creating multiple junk accounts on the network, the network has placed 1 XRP basic spare requirements. In particular, the first requirement was 10 XRP before the December 2024 revision, reducing the minimum balance by 90%.
Meanwhile, Bitwise pointed out that the basic reservation requirement is not a prominent driver of XRP ownership or demand. With approximately 6.1 million active addresses in the ledger, the portion of XRP trapped for account maintenance will minimize the impact on supply, even if it’s a 100x increase.
Finally, the expo bridged currency status as the XRP currency status is the most important feature in the ecosystem and is seen as the main driver of the price of assets.
Ripple’s core business is tied to large-scale currency-to-currency-to-asset bridging, and adoption of XRP as a central bridging asset encourages institutional clients to retain XRP, which has a significant impact on supply and price.
Excerpt from BitWise XRP Report
Interestingly, Ripple has plans Compete SWIFT is the world’s largest payment messaging solution. Analysts predict that if financial technology companies only handle 15% of Swift’s daily trading volume, the price will explode to $25.68.
Nevertheless, XRP’s utility as a central bridge asset attracted attention from Ripple USD Stablecoin, which was launched in December. Ripple guarantees that Dollar-Pegged Tokens are not going to replace XRP, but it affects the number of transactions processed by XRPL native tokens.
