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

Ripple is positioning the XRP Ledger (XRPL) as an institutional DeFi infrastructure, focusing on compliance controls, tokenized cash, and collateral settlement rather than competing with permissionless DeFi hubs on Total Value Locked (TVL).

The institutional pitch centers on features like identity management (Credentials) and token standards (Multi-Purpose Tokens) that are already live, with further developments like a permissioned DEX and a lending protocol planned for later this year. However, current metrics show thin liquidity on XRPL, with stablecoins around $418 million and the DEX TVL at only about $38 million, which is insufficient to prove that institutional adoption will deepen liquidity.

Ripple's core argument for XRP's relevance lies in its potential role as an intermediary asset via auto-bridging on the DEX, functioning as market plumbing rather than just a fee-burning token. The success of this thesis hinges on whether regulated stablecoin and FX flows materialize and consistently choose XRP as the preferred routing hop over direct token pairs, ultimately leading to XRP being held, lent, and used as intermediate inventory in complex financial flows.

(Source：CryptoSlate)