David Schwartz, former chief technology officer of Ripple, recently addressed the relationship between institutional adoption of the XRP Ledger (XRPL) and the demand for XRP. Schwartz argued that successful financial applications built on the XRPL would likely increase demand for the token and provide support for its value.
Connection between XRPL adoption and XRP demand
Schwartz, who is known for his influential role in designing Ripple’s core technologies, explained that XRP’s importance within the network extends to payments, liquidity provision, transaction fees, and account reserves. In a detailed discussion on X (formerly Twitter), he stated that a scenario where the XRPL achieves broad success in finance, yet XRP itself remains in low demand, is highly improbable.
A world where the XRPL succeeds in financial applications without generating high demand and value for XRP is very unlikely, unless a single, totally dominant settlement asset emerges, which seems improbable.
He acknowledged one remote exception: the global financial system could move toward a single overwhelmingly dominant settlement asset, potentially diminishing XRP’s necessity. Schwartz, however, called this scenario unlikely.
XRP’s function within the network
The conversation also touched on the XRP fee-burning mechanism. Saul, an X user, pointed out that while higher transaction fees would burn XRP faster, they could also reduce the network’s usability by increasing costs for users. As a result, the network aims to keep fees low to promote efficient transactions and deter spam.
Responding to these points, Schwartz emphasized that the strength of the XRPL stems from low fees and reliable operation. He suggested that these attributes make the ledger attractive for moving and holding value, and in turn, this activity benefits XRP because of its particular advantages as a network asset.
He wrote that XRP captures value flowing into the XRPL due to its unique properties compared with other ledger assets.
The discussion highlighted that while transaction fees and account reserves create some underlying demand for XRP, broader adoption of the XRPL in financial use cases could be the decisive factor for the token’s value growth.
Mini dictionary: XRP Ledger (XRPL) is a decentralized blockchain protocol developed by Ripple to enable fast and low-cost cross-border payments and asset transfers. XRP, its native digital asset, is used within the network for liquidity, transaction fees, and as a default settlement token.
XRP’s wider utility and competitive landscape
Saul also argued that XRP’s use as a liquidity bridge—often called “autobridging”—through automated market making and order book routing creates a more immediate link between network activity and price. He suggested that while transaction fees and reserves may exert only minor direct influence, market expectations generated by expanding financial use could drive real demand.
Schwartz agreed, adding that XRP remains the only counterparty-free asset each XRPL account can accept, and that accounts require XRP to pay transaction fees. These requirements, coupled with potential increases in overall network activity, can contribute to steady demand.
Despite these advantages, Schwartz noted that the connection between ecosystem growth and asset price is not automatic. The value of XRP will depend on actual adoption, competitive dynamics, and broader market trends.
Low fees and dependable operation make the XRPL a natural choice for moving and holding value, and XRP benefits from its status as a native, counterparty-free asset required for transactions.
Schwartz maintains high demand for XRP is likely with XRPL growth
In closing, Schwartz reinforced his belief that a thriving XRPL ecosystem will almost inevitably generate greater demand for XRP. He does not expect significant XRPL adoption to occur without the token also gaining value, except in the unlikely event of a single global settlement asset.
His comments reflect a broader view of how digital asset ecosystems may evolve, emphasizing the interplay between technical design, utility, and real-world adoption.
