Expert Says Ripple ODL Cannot Help XRP Price Grow: Here’s Why

Expert Says Ripple ODL Cannot Help XRP Price Grow: Here’s Why

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Notable figures in the XRP community have engaged in intense debate about the role of Ripple’s On-Demand Liquidity (now Ripple Payments) in propelling XRP’s market value.

Ripple ODL Cannot Help XRP Price Grow

Renowned crypto author Panos Mekras has asserted that Ripple’s XRP-based solution for cross-border payment solutions, no matter how successful, will not inherently impact the price of XRP. Mekras argues that Ripple’s ODL is engineered to be demand-neutral.

He highlighted that ODL transactions primarily involve instant buying and selling of XRP, with no inherent demand for XRP originating from ODL itself.

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Notably, this assertion is supported by a document from Ripple for SEC. In the paper, the payment firm explicitly states that most ODL transactions are demand-neutral, thus exerting no influence on the price of XRP.

Furthermore, Mekras underscored the presence of negative demand with Ripple’s payment solution. He noted that most XRP utilized for ODL originates directly from Ripple’s escrow. He believes the influx of XRP bolsters selling pressure as it introduces “new” XRP tokens into the market.

Consequently, Mekras emphasized that Ripple’s payment solution alone for cross-border transactions cannot increase the price of XRP.

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Community Member Disagrees

On the other hand, pro-XRP X user Nietzbux finds Mekras’ view concerning. First, Nietzbux highlighted the necessity of a highly liquid market and an ideally higher XRP price for the efficient functioning of ODL or any bridging product utilizing XRP. 

Notably, the idea is that XRP’s supply cannot accommodate multi-billion dollar transactions unless XRP is expensive.

Nietzbux observes that pundits like Mekras push the idea that the XRP community needs more developers to stimulate demand for XRP to elevate its price via various utilities. However, Nietzbux finds this logic absurd. 

According to him, it implies that Ripple is relying on the community to generate the needed demand and price increase for XRP.

To support his argument, Nietzbux cited a scenario in which a large bank may inquire about the feasibility of transferring $100 billion of value in three seconds using XRP.

Ripple’s purported response would be that it is waiting for the XRPL community to generate the demand to increase XRP’s price to make the transaction possible.

In response, Mekras stressed that the perspective Nietzbux finds absurd is actually the reality. He pointed out that other community members, including Ripple’s Chief Technology Officer David Schwartz, have echoed similar sentiments numerous times.

Regarding the question of moving $100 billion with XRP via Ripple’s solution, Mekras noted that the right answer is that the liquidity for such a transaction to happen is absent.

Furthermore, Mekras prompted Nietzbux to contemplate why Ripple has not successfully onboarded any major banks for ODL or why the ODL volume remains relatively low compared to XRP’s total trading volume.

Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.

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