- Ripple CTO says banks still avoid XRPL on-chain due to systemic challenges and liquidity risks from malicious actors.
- BlackRock’s possible use of XRPL is unlikely to be exclusive, as asset interoperability is prioritized in tokenized finance.
- Bridge currencies like XRP are necessary in a market where multiple stablecoins and tokenized assets will continue to coexist.
David Schwartz, Chief Technology Officer at Ripple, has addressed the slow growth of on-chain volume on the XRP Ledger (XRPL), despite the company securing multiple partnerships with banks. He explained that many institutional players continue to prefer using digital assets off-chain due to current system limitations and concerns.
According to Schwartz, although adoption has lagged, the trend may be shifting. He noted that institutional players are beginning to recognize the benefits of using blockchain technology for transactions. This shift could eventually increase on-chain activity, but progress remains slow.
DEX Usage Limited by Risk of Bad Actors
Schwartz also highlighted a key limitation Ripple currently faces. He stated that the company is unable to fully utilize the XRP decentralized exchange due to the risk of malicious actors providing liquidity. A potential solution being considered is the introduction of permissioned domains, which could help in managing and regulating participants on the network more effectively.
Addressing speculation about BlackRock possibly adopting XRPL, Schwartz noted that the financial giant is unlikely to rely solely on one network. He explained that interoperability and asset portability are more critical in the current blockchain ecosystem. For instance, Circle does not restrict USDC to a single blockchain, and a similar strategy could be expected from BlackRock with tokenized assets.
Bridge Assets Still Essential in Stablecoin Landscape
Due to the recent introduction of RLUSD, the necessity of XRP as a bridge currency has been put into question. In response to that, Schwartz pointed out that a stablecoin cannot take over the whole world. In a market that is dominated by several stablecoins, a bridge asset is still needed to enable direct transfers and uncollateralized assets, or even tokenized securities and loan portfolios.
The statements of the Ripple CTO provide information on how challenges persist and changes in the strategy of blockchain adoption in the financial system. His comments reinforce why options such as bridge currencies and regulatory frameworks are needed to open the door to further on-chain adoption by large institutions.
