Ripple says compliance controls will unlock DeFi, but XRPL liquidity is still too thin to prove it

Ripple is working to make decentralized finance more familiar to regulated institutions and is placing XRP at the center of that effort.

DeFi’s earlier growth cycles were built around open, retail-facing liquidity pools and the associated risk tolerance. Total value locked across major protocols climbed into the tens of billions of dollars and, at previous peaks, surpassed $100 billion.

Ripple’s pitch is that the next phase will be shaped less by permissionless pools and more by controlled access, compliant settlement, and tokenized cash and collateral that institutions can recognize as market infrastructure.

In a February blueprint, Ripple described an institutional DeFi stack on the XRP Ledger (XRPL) that centers on stablecoin settlement, tokenized collateral, compliance controls, and an on-ledger credit layer, which is planned for later this year.

Rather than competing with the largest DeFi hubs on raw totals, Ripple is emphasizing primitives that align with how institutions already organize markets, including identity, access control, cash flows, and collateral settlement.

Cash and collateral are scaling

A key part of Ripple’s framing is that the most durable activity may sit outside traditional DeFi totals. Tokenized cash equivalents and high-grade collateral have expanded sufficiently to continue attracting attention even as speculative activity cools.

RWA.xyz, which tracks tokenized real-world assets, reported a represented asset value of about $21.41 billion and a distributed asset value of nearly $23.87 billion. Its tokenized US Treasuries dashboard showed a total value of around $10.0 billion.

Ripple is positioning XRPL to align more closely with those flows. The blueprint highlighted features to support tokenized instruments and delivery-versus-payment workflows, while keeping access controls and compliance tooling close to the base layer.

Meanwhile, the extent to which large tokenization remains contested.

McKinsey has estimated that tokenized market capitalization across asset classes could reach about $2 trillion by 2030.

On the other hand, a separate BCG and ADDX report forecast a larger opportunity, projecting that tokenization could reach about $16.1 trillion by 2030.

What is live on XRPL, and what is still on the roadmap

Ripple’s institutional argument hinges on a clear split between what the network can already support and what still has to ship.

The XRPL already runs meaningful transaction volume and has native exchange rails.

Messari said average daily transactions rose 3.1% quarter over quarter to about 1.83 million in the fourth quarter of 2025, while average daily active addresses slipped to about 49,000.

Payment transactions declined 8.1% to roughly 909,000, while offer creation grew to about 42% of the transaction mix.

Those figures do not, on their own, show institutional participation. But they matter to Ripple’s pitch because they indicate that the settlement and exchange layer is already used at scale, which reduces the burden on institutions to treat XRPL as an operating rail rather than a greenfield experiment.

Ripple said several components are already live, including Multi-Purpose Tokens, a token standard designed to carry metadata such as restrictions, and Credentials, which it describes as an identity layer for attaching attestations such as KYC status to participants.

Ripple also listed Permissioned Domains, along with tooling such as Simulate and Deep Freeze, and an XRPL EVM sidechain.

It also laid out a timetable for additional pieces, including a permissioned decentralized exchange in the second quarter, smart escrows and Multi-Purpose Token DEX integration in the second quarter, and confidential transfers for Multi-Purpose Tokens using zero-knowledge proofs in the first quarter.

The roadmap also includes a lending protocol based on the XLS-65 and XLS-66 specifications.

The near-term reporting test is whether measurable liquidity deepens before the later features arrive.

DefiLlama data showed stablecoins circulating on XRPL at roughly $418 million, with RLUSD accounting for about 83% of that total. It also showed the XRPL DEX at about $38.21 million in total value locked and about $15.08 million in 24-hour volume, with cumulative volume around $2.019 billion.

Those baselines are not large relative to the biggest DeFi venues, but they provide a concrete starting point for evaluating whether permissioned markets deepen, whether order books thicken, and whether routed volume rises once the roadmap items ship.

Why XRP matters in the plumbing

Ripple’s claim is that XRP’s relevance comes less from a burn narrative and more from how the ledger routes value.

On XRPL, transaction fees are paid in XRP and destroyed, a design meant to deter spam. The network’s base transaction cost is small, often described as 10 drops, and the protocol burns the exact fee specified when a transaction is included in a validated ledger.

For context, Messari quantified the fee channel’s actual size. It said transaction fees, in dollars, fell to about $133,100 in the fourth quarter, and that native transaction fees declined to about 57,600 XRP.

It also said roughly 14.3 million XRP had been burned since the ledger’s inception, a low burn rate it tied to low per-transaction costs.

XRPL also uses reserves that can create structural demand for XRP as usage grows. Official XRPL documentation lists a base reserve of 1 XRP per account and an owner reserve of 0.2 XRP per item, which applies to objects such as trust lines and offers.

That said, Ripple’s argument implies that fee burn and reserves are not the primary levers. The larger story is liquidity routing.

XRPL’s decentralized exchange supports auto-bridging, which can use XRP as an intermediary when it reduces costs compared with trading two tokens directly.

This is where the institutional pitch becomes testable. If regulated stablecoin and FX pairs develop on a permissioned DEX, XRP could become inventory held by market makers to intermediate flows.

But the design does not guarantee that outcome. Auto-bridging is conditional, and direct stablecoin-to-stablecoin pairs can dominate if they offer better execution.

Ripple’s thesis rests on XRP becoming the preferred hop often enough that it functions as market-structure plumbing rather than a passive fee token.

The stablecoin wedge and the credit question

Ripple is leaning on stablecoins as the institutional on-ramp and forecasts diverge on how fast that market could grow.

JPMorgan analysts project that stablecoins could reach $500 billion by 2028, calling higher projections too optimistic. However, Standard Chartered has published a more aggressive outlook, expecting the stablecoin market cap to reach $2 trillion by the end of 2028.

Ripple’s RLUSD is part of that bet. CryptoSlate’s data showed RLUSD at a market cap of about $1.49 billion. On XRPL specifically, DefiLlama data showed that RLUSD dominates, with around $348 million in stablecoins on that chain.

The second wedge is credit. Ripple’s roadmap calls for a native lending protocol later this year, with underwritten risk management remaining off-chain.

One early signal of interest comes from Evernorth, a Ripple-backed firm that said it intends to use the upcoming XRP lending protocol, XLS-66, as part of its strategy.

In a Jan. 29 blog post, Evernorth said the protocol is intended to enable fixed-term, fixed-rate loans and included risk disclosures, noting that the lending protocol is a proposed amendment that may not be approved or implemented.

For XRP, the credit layer matters because it could turn holdings into a balance-sheet utility without leaving the ledger, but it also introduces the kinds of performance questions institutions will treat as non-negotiable, including underwriting standards, default management, operational controls, and loss outcomes once loans are live.

What to watch as Ripple’s thesis gets tested

Ripple’s bet is measurable, and it will not be settled by a single TVL print.

One path is a narrow compliance outcome.

In that scenario, permissioned market rails exist, but liquidity stays thin, activity remains episodic, and most stablecoin trading continues to concentrate on larger venues.

XRP’s role would then skew toward protocol mechanics, including reserves and small fee burns, with limited evidence that market makers are holding XRP as inventory to intermediate flows.

A second path is a stablecoin and FX beachhead. Here, RLUSD and other stablecoins become the cash leg for regulated corridors on XRPL, and a permissioned DEX produces consistent order book depth in a handful of pairs.

The question would be whether XRP actually wins routing share. Auto-bridging can use XRP to improve execution, but this is not guaranteed. Direct stablecoin-to-stablecoin pairs can dominate if they are cheaper or offer deeper liquidity.

The clearest KPI is the routed volume share, specifically the frequency with which XRP is the preferred hop when traders move between stablecoins and tokenized instruments.

The third path is the one Ripple is implicitly targeting, a collateral and credit flywheel.

If tokenized collateral workflows grow and lending goes live with predictable performance, XRPL will look less like a payments network with add-ons and more like a settlement stack that institutions can plug into.

In that world, XRP matters less because it is burned and more because it is held, posted, borrowed, lent, and used as intermediate inventory in flows that resemble foreign exchange and secured financing, rather than retail yield chasing.

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