After launching EVM sidechain and making stablecoin, Ripple is only able to sell coins?

Jessy, Golden Finance

Ripple plans to launch the XRPL EVM sidechain in 2025. At the same time, its US dollar stablecoin is also in the internal testing stage.

The launch of the sidechain is to build Ripple's ecology. This project, founded in 2012 and specializing in payments, is also going to build an ecology. However, in terms of the on-chain ecology, unlike the traditional public chains in the currency circle, Ripple will generally focus its business on RWA.

XRPL is a public chain made by Ripple. The project was launched in 2012. At present, its total TVL value is nearly 15 million US dollars, ranking 78th among all public chains. In recent years, although Ripple's market value has been ranked in the top ten, it no longer has much influence in the industry. In recent years, the major event that has attracted industry attention is that it was sued by the SEC. In July 2023, the case was concluded, and its token XRP was not identified as a security.

According to its official plan, Ripple currently has three major business segments: payment, stablecoin, and custody. This is actually very consistent with the business positioning of traditional finance, and it is also a main line of compliance development in the crypto industry in recent years.

How are Ripple's businesses doing? How does Ripple make money? Is it really just selling coins as the outside world says?

Payments don't make money, they can only make money by selling coins

When Ripple was first established in 2012, its vision was to become a "bridge currency" used by financial institutions to solve global cross-border payments, in order to build a global payment network with more convenient transfers and lower costs. Its main partners are traditional financial institutions in various countries.

In 2018, when the popularity was at its peak, XRP's market value once approached about 150 billion US dollars, surpassing Ethereum again and ranking second in market value after Bitcoin.

Ripple's predecessor was RipplePay, a payment company founded in 2004. Its goal was to establish a peer-to-peer payment network that could replace the banking financial system. In Ripple's initial product system, there were three major products, xCurrent, ODL cross-border payment platform and xVia. xCurrent is Ripple's flagship product, mainly providing cross-border transactions between banks, but this service does not use XRP. The only product that can use XRP is OLD, which is that the payer first converts the payment into XRP and sends it to the payee's bank. The bank converts the received XRP into the corresponding currency and then pays it to the corresponding payee. In this scenario, XRP has become a medium for fund conversion, but banks do not like this product. If the price of XRP fluctuates greatly, it will cause exchange losses. xVia is a standardized API interface that uses Ripple network services. Users can directly use the above two functions through this interface. It is called the last stage of Ripple's product ecosystem.

Ripple Senior Vice President Marcus Treacher once said in an interview that half of Ripple's customer base are banks and the other half are fintech payment providers. 25% of the banks are really big banks, such as Bank of Tokyo, Mitsubishi Bank, Santander Bank and Standard Chartered Bank. The easiest thing for banks and payment companies to accept is remittances.

But in fact, many of Ripple's well-known partnerships have failed. For example, Santander, one of the largest banks in the European Union, froze Ripple after realizing that using XRP could not meet the needs of its customers. MoneyGram also ended its cooperation with Ripple due to the increasing costs associated with cross-border XRP payments.

Some partners listed on Ripple's official website

Ripple itself is basically facing institutional customers. Ripple has claimed in the past that it has more than 200 customers from central banks and financial institutions in more than 40 countries. But usually, except for the initial announcement that the company will use XRP for cross-border services, there are few signs of how often Ripple's financial services are actually used. How profitable are these businesses of Ripple itself? It has not been disclosed to the public.

Besides, even the payment business itself does not make much money. The real money-making business is selling XRP tokens. XRP itself has no value. With Ripple backing it, XRP is not of much help to Ripple's business, and it can't even be used at all.

XRP was issued in March 2013 and began trading in April 2014, with an initial total issuance of 100 billion.

Initially, 20% of the tokens were allocated to the founding team. In January 2018, the price of XRP soared 50,000% and was at its peak. At this time, Chris Larsen, the founder of Ripple, who held 5.2 billion XRP, became the first cryptocurrency billionaire to be listed on the Hurun Rich List with a net worth of $8 billion. Forbes believes that he is the richest person in the blockchain industry.

And more tokens are in the hands of Ripple. Combing through the records and reports disclosed by Ripple in the past year, it will be found that Ripple has been selling XRP every quarter.

The XRP held by Ripple is divided into two parts, one part is in its wallet, and the other part is hosted in the ledger. As of the end of March 2024, the total amount of these two parts is 45 billion, accounting for 45% of the total XRP issuance.

The total amount of XRP directly held in the RIPPLE wallet on March 31, 2023 is: 5,506,585,918, and on March 31, 2024

The total amount of XRP directly held in the Ripple wallet is: 4,836,166,156.

Another type of XRP held in the XRP ledger, these locked XRP will be released monthly in the future, and the released part, XRP will sell it to enterprises.

On March 31, 2023, the total amount of XRP in the ledger is 42,800,000,013

, and on March 31, 2024, the total amount of XRP in the ledger is 40,100,000,005.

Currently, that is to say, within a year, Ripple has sold nearly 3.4 billion XRP, accounting for 3.4% of the total XRP issuance. According to the price of $0.5, it has cashed out $1.7 billion by selling XRP in one year.

The payment was not successful, but selling coins can make Ripple earn a lot of money.

Ripple, has always had a strong flavor of traditional finance

Although XRP is basically useless in the Ripple ecosystem, in the past two years, Ripple has indeed been actively exploring the development of the XRPL ecosystem.

In 2024, Ripple began beta testing Ripple USD (RLUSD) on XRP Ledger (XRPL) and the Ethereum mainnet. It is reported that Ripple USD will be 100% backed by US dollar deposits, short-term US government bonds and other cash equivalents. These reserve assets will be audited by a third-party accounting firm. Ripple CTO David Schwartz said that the upcoming stablecoin RLUSD will initially be open only to institutions.

Not only that, Ripple is also expanding the programmability of the XRP ledger, introducing native smart contract functions on the XRP ledger mainnet (currently in the research stage), and the XRPL EVM sidechain will soon be launched. After the network is built, Ripple will introduce DeFi and RWA into the Ripple ecosystem.

Archax, a digital asset exchange, broker and custodian regulated by the UK Financial Conduct Authority, announced that it expects to introduce hundreds of millions of dollars of tokenized RWA into XRPL in the next year.  

DeFi and RWA are the two major grippers of traditional finance in the layout of Web3, and neither is indispensable. After real assets are on the chain, various pledges, loans, etc. are carried out on the blockchain.

Stablecoins are indeed a very stable and profitable business in the industry. Tether's revenue in 2023 exceeded BlackRock's. At present, more and more institutions are entering the stablecoin business. Ripple's release of its own stablecoin on the XRPL chain is just following this trend.

Ripple is not an institution that has innovation and leadership in the blockchain industry. It can live well by selling XRP. At present, it is much later than the institutions in the currency circle to do EVM sidechains or stablecoins. On the contrary, in line with the pace of traditional financial institutions, Ripple is indeed developing projects steadily, but very slowly and late. According to its external disclosure, it only added the AMM function to DEX this year.

It can also be clearly seen from the direction and speed of these layouts that Ripple does not intend to do what the native currency circle public chain wants to do. Its resources are in traditional finance, and its service objects are mainly corporate customers. In addition to stablecoins and payments, it also has custody business, which is also important for its future development. This business mainly provides encrypted custody services for traditional banks.

The Metaco platform acquired by Ripple in 2023 is dedicated to custody business. This year, BCB migrated its custody business to the Metaco platform. At present, the crypto custody business of DZ Bank, one of the largest banks in Germany, also uses Ripple's services. For Ripple, the acquisition of Metaco is precisely because it has taken a fancy to the fact that many traditional banks will launch crypto businesses in the future, and Ripple has taken a fancy to the future development potential of the institutional cryptocurrency custody industry.

This year, Ripple also acquired the cryptocurrency trust company Standard Custody & Trust. As a US cryptocurrency trust company, Standard Custody & Trust will provide Ripple with more asset custody and settlement services.

Another significance of this matter is that although Ripple has long regarded the expansion of overseas markets as its top priority due to the litigation storm with the US SEC, in addition to setting up the Asia-Pacific headquarters in Singapore and holding a local payment license, it once considered an IPO in markets outside the United States. Currently, more than 90% of Ripple's business is outside the United States. But last year, the lawsuit with the SEC finally came to an end. After XRP was not identified as a security, Ripple once again turned its attention back to the US market. This acquisition may indicate that Ripple will continue to make great efforts in the US market.

The license held by Standard Custody&Trust Co. in New York will allow Ripple to provide financial companies with more diversified services such as asset tokenization, cryptocurrency custody and settlement, so that the scope of business covered by Ripple is no longer limited to payment networks. It is reported that Ripple is currently seeking to obtain a remittance license in the United States.

From these key layouts of Ripple this year, we can see that it is still committed to the business of transforming traditional finance to Web3, which is more stable and more compliant than the traditional currency circle. Ten years ago, it was inappropriate for Ripple to do this. But now, this has become the general trend of the industry. Perhaps Ripple is wise this time, but the XRP token itself has almost no role in Ripple's development direction.