Ripple is working to make decentralized finance more familiar to regulated institutions and is placing XRP at the center of this effort.
Previous DeFi growth cycles were built around open retail liquidity pools and the associated risk tolerance. The total value locked in major protocols has reached tens of billions of dollars and, at previous highs, exceeded $100 billion.
Ripple’s argument 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 plan, Ripple outlined an institutional DeFi stack on the XRP Ledger (XRPL) that focuses on stablecoin settlement, tokenized collateral, compliance checks, and a ledger credit layer, planned for later this year.
Rather than competing with the largest DeFi hubs on raw totals, Ripple is emphasizing primitives that match how institutions already organize markets, including identity, access control, cash flow, and collateral settlement.
Liquidity and guarantees are evolving
A key part of Ripple’s framework is that the most sustainable activity may lie outside of traditional DeFi totals. Tokenized cash equivalents and high-quality collateral have grown enough to continue to attract attention even as speculative activity cools.
RWA.xyz, which tracks real-world tokenized assets, reported a represented asset value of approximately $21.41 billion and a distributed asset value of nearly $23.87 billion. Its tokenized dashboard of U.S. Treasuries showed a total value of approximately $10.0 billion.
Ripple is positioning XRPL to more closely align with these flows. The plan highlighted features to support tokenized instruments and delivery-to-pay workflows, while keeping access controls and compliance tools close to the base layer.
Meanwhile, the extent to which large tokenization occurs remains contested.
McKinsey has estimated that the token market capitalization of all asset classes could reach around $2 trillion by 2030.
On the other hand, a separate report from BCG and ADDX foresees a larger opportunity, predicting that tokenization could reach around $16.1 trillion by 2030.
What’s live on XRPL and what’s still on the roadmap
Ripple’s institutional argument relies on a clear distinction between what the network can already support and what still needs to be delivered.
XRPL already handles significant trading volume and has native exchange rails.
Messari said average daily transactions increased 3.1% quarter-over-quarter to around 1.83 million in the fourth quarter of 2025, while average daily active addresses fell to around 49,000.
Payment transactions decreased 8.1% to around 909,000, while offer creation increased to around 42% of the transaction mix.
These figures alone do not demonstrate institutional participation. But they are important to Ripple’s pitch because they indicate that the settlement and exchange layer is already in use at scale, reducing the burden on institutions to treat XRPL as a mining rail rather than a new experiment.
Ripple said several components are already operational, including Multipurpose 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 permitted domains, along with tools like Simulate and Deep Freeze, as well as an XRPL EVM sidechain.
It also set a timeline for additional elements, including a permitted decentralized exchange in the second quarter, smart deposits and the integration of the versatile token DEX in the second quarter, and confidential transfers for versatile 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 short-term reporting test is whether measurable liquidity deepens before later features arrive.
Data from DefiLlama showed that stablecoins were circulating on XRPL worth around $418 million, with RLUSD accounting for around 83% of that total. It also showed that the XRPL DEX was worth around $38.21 million in total value locked and around $15.08 million in 24-hour volume, with a cumulative volume of around $2.019 billion.
These benchmarks are not large compared to the largest DeFi sites, but they provide a concrete starting point for assessing whether authorized markets are deepening, order books are thickening, and volume being moved increases once roadmap items are shipped.
Why XRP is important in 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 intended to deter spam. The network’s base transaction cost is low, often described as 10 drops, and the protocol burns the exact specified fee when a transaction is included in a validated ledger.
To provide context, Messari quantified the actual size of the pricing channel. He said transaction fees, in dollars, fell to around $133,100 in the fourth quarter and native transaction fees fell to around 57,600 XRP.
He also said that approximately 14.3 million XRP had been burned since the ledger’s inception, a low burn rate linked to low costs per transaction.
XRPL also uses reserves which can create structural demand for XRP as its usage increases. The 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 items such as trustlines and offers.
That said, Ripple’s argument implies that fee consumption and reserves are not the primary levers. The biggest problem is liquidity routing.
XRPL’s decentralized exchange supports automatic bridging, which can use XRP as an intermediary when it reduces costs compared to directly exchanging two tokens.
This is where the institutional pitch becomes testable. If regulated stablecoin and FX pairs develop on a permissioned DEX, XRP could become a stock held by market makers for intermediate flows.
But the design does not guarantee this result. Auto-bridging is conditional and direct stablecoin-stablecoin pairs can dominate if they offer better execution.
Ripple’s thesis relies on the fact that XRP quite often becomes the preferred leap to function as a market structure plumbing rather than a passive fee token.
The stablecoin and the question of credit
Ripple is leaning on stablecoins as the institutional on-ramp and forecasts diverge on how quickly this market could grow.
JPMorgan analysts predict that stablecoins could reach $500 billion by 2028, calling these projections overly optimistic. However, Standard Chartered issued a more aggressive outlook, expecting the stablecoin market capitalization to reach $2 trillion by the end of 2028.
Ripple’s RLUSD is part of this bet. CryptoSlate data shows that RLUSD has a market capitalization of around $1.49 billion. On XRPL in particular, data from DefiLlama showed that RLUSD dominates, with around $348 million worth of stablecoins on this chain.
The second corner is credit. Ripple’s roadmap calls for a native lending protocol later this year, with underwritten risk management remaining off-chain.
One of the first signals of interest comes from Evernorth, a Ripple-backed company, which announced plans to use the upcoming XRP lending protocol, XLS-66, as part of its strategy.
In a Jan. 29 blog post, Evernorth said the protocol aims to enable fixed-rate, fixed-term loans and includes risk disclosure, noting that the loan protocol is a proposed amendment that may not be approved or implemented.
For XRP, the credit layer is important because it could transform holdings into a balance sheet utility without leaving the ledger, but it also introduces the types of performance issues that institutions will treat as non-negotiable, including underwriting standards, default management, operational controls, and losses once loans are made.
What to watch while Ripple’s thesis is tested
Ripple’s bet is measurable and it will not be settled by a single TVL print.
One of them is a narrow compliance score.
In this scenario, permitted market rails exist, but liquidity remains low, activity remains episodic, and most stablecoin exchanges continue to focus on larger venues.
The role of XRP would then shift towards protocol mechanisms, including reserves and small spends, with limited evidence of market makers holding XRP as inventory for intermediary flows.
A second path is a stablecoin and FX beachhead. Here, RLUSD and other stablecoins become the monetary part of the 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 the routing share. Autobridging may use XRP to improve execution, but this is not guaranteed. Direct stablecoin-stablecoin pairs can dominate if they are cheaper or offer greater liquidity.
The clearest KPI is the share of volume routed, specifically how often 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 buffer.
If tokenized collateral workflows grow and loans go 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 this world, XRP matters less because it is burned and more because it is held, issued, borrowed, lent, and used as intermediate inventory in flows that resemble currencies and collateralized financing, rather than a search for retail yield.
