POn the night of March 2, during the weekend, the crypto market was in turmoil when former U.S. President Donald Trump unexpectedly issued a statement regarding the U.S. Crypto Reserve: “The U.S. Crypto Reserve will elevate the status of this crucial industry, despite years of corrupt attacks under the Biden administration. That is why my digital asset executive order directs the Presidential Task Force to advance a crypto strategic reserve that includes XRP, SOL, and ADA. I will ensure that the United States becomes the world’s crypto capital. We are making America great again!”

Subsequently, the crypto market immediately experienced a surge. It can be described as “an arrow piercing the clouds, rallying thousands of troops.” Although BitMEX co-founder Arthur Hayes commented that there was “nothing new,” this does not prevent us from analyzing XRP and the business model behind Ripple. Following the announcement, XRP surged by over 30%.

Therefore, this article will provide a preliminary explanation of what Ripple and XRP are, their relationship, and how they operate within both Web2 and Web3. This combination of Web2 and Web3 business models is worth studying in the industry, especially in the current context of widespread discussions on crypto mass adoption. Many real-world applications still require the support of Web2 models to facilitate adoption while leveraging Web3’s advantages in ecosystem networking.

1. Ripple Labs——A financial technology company

Ripple is a U.S.-based financial technology company, also known as Ripple Labs, that focuses on providing blockchain-based solutions for cross-border payments and financial settlements. Its core objective is to optimize international remittance processes within the traditional financial system using blockchain technology, increasing transaction speed while reducing costs. Ripple’s main products and services include (i) cross-border payments and remittances facilitated through RippleNet and (ii) the recently launched RLUSD stablecoin.

The blockchain technology mentioned above is the foundation of Ripple’s services, primarily relying on the XRP Ledger (XRPL), an independent distributed ledger technology (DLT) designed to record and verify transactions. XRP is the native utility token operating on this ledger, often considered an alternative to the SWIFT payment network used by traditional financial institutions.

The XRP Ledger, or XRPL, is a payment-focused blockchain network developed by Ripple in 2012. It enables financial institutions and payment service providers to offer innovative financial services, including custody solutions, digital wallets, and other decentralized applications (DApps).

Following the launch of the XRP Ledger, Ripple focused on using distributed ledger technology to help financial institutions process cross-border payments and remittances. Over time, in addition to the XRP Ledger and its native XRP token, Ripple developed various cross-border payment solutions. Eventually, all these solutions were integrated into a flagship service known as RippleNet.

RippleNet is one of Ripple’s key products. Although the company has developed multiple financial solutions leveraging the XRP Ledger and XRP over the years, many of these concepts were later unified under a single brand: RippleNet. This global payment network connects banks, payment service providers, and financial institutions, offering real-time settlement and currency exchange services.

2. XRP Ledger——Blockchain ledger network

As early as 2011, Jed McCaleb began developing a new digital currency consensus network. In 2012, he approached Ryan Fugger, the founder of RipplePay (now Ripple Payments), a peer-to-peer credit payment network, to further build upon the concept Fugger had been developing since 2004. After discussions with the community, Ryan Fugger handed over the platform to Jed McCaleb, leading to the project being renamed Ripple. Subsequently, with further contributions from Jed McCaleb, Arthur Britto, and David Schwartz, the XRP Ledger (XRPL) was created in 2012, with XRP serving as its native token.

The XRP Ledger is a blockchain-based payment protocol designed to facilitate cross-border payments and central bank digital currency (CBDC) management. Unlike most blockchains, XRPL does not rely on Proof of Work (PoW) or Proof of Stake (PoS) consensus mechanisms. Instead, the network uses a Cobalt-based consensus mechanism, an open-network Byzantine Fault Tolerance (BFT) governance framework, and the Ripple Protocol Consensus Algorithm.

The XRP Ledger offers low transaction costs and high performance, with its native token, XRP, classified as a payment cryptocurrency. These tokens provide a means of storing and transferring value via a distributed network rather than through a centralized government. In this system, XRP’s primary function is to serve as a payment medium for transaction fees on the XRPL.

Shortly after the XRP Ledger was launched, Jed McCaleb and Arthur Britto co-founded a company with Chris Larsen called NewCoin. This company was later renamed OpenCoin and eventually became Ripple Labs Inc. Upon its establishment, the entity was allocated 80 billion XRP, accounting for 80% of the initial total token supply. The following year, Jed McCaleb left Ripple and later went on to establish Stellar.

3. XRP——native token

XRP is the native crypto asset of the XRP Ledger. Its primary function is to provide a global payment solution that is faster and more cost-effective than traditional financial systems.

XRP operates relatively independently and does not rely entirely on Ripple as a company. The XRP Ledger is maintained by independent validator nodes worldwide, including universities and exchanges. Ripple itself primarily holds a significant amount of XRP and contributes to technological development. Even if Ripple were to collapse, XRP would continue to exist.

This independence gives XRP greater scalability, enabling the development of a broader XRP-based financial payment ecosystem. For example:

• DeFi and Tokenization: XRPL supports the issuance of stablecoins, NFTs, and other assets such as CBDCs.
• Independent Payment Tool: Users can directly use XRP for peer-to-peer transfers without needing to go through RippleNet.

（https://x.com/meandivergence/status/1391416092229349379）

Therefore, the value of XRP is not directly tied to the success or failure of Ripple Labs, and vice versa. Similarly, Ripple cannot prevent anyone from using the XRP Ledger for their own services, although its large holdings of XRP may limit potential competition.

Ripple is committed to improving the global payment system through its technology, with XRP serving as one of the key tools in achieving this goal.

In simple terms, Ripple is a private company that provides financial payment services, while XRP is the native cryptocurrency of the blockchain network it utilizes to enable fast and low-cost cross-border payments.

It is important to note that Ripple is not as decentralized as other public blockchains and holds a significant amount of XRP tokens. Unlike decentralized networks, Ripple operates as a for-profit entity that provides services to financial institutions. While it initially developed the XRP Ledger and remains a key contributor to the XRP network, the Ripple team still holds a substantial portion of XRP tokens.

（XRPL.org）

XRP’s core function is to serve as a bridge currency for cross-border payments. In Ripple’s On-Demand Liquidity (ODL) solution, XRP acts as an intermediary, replacing the traditional pre-funded accounts used in correspondent banking systems. For example:

A U.S. bank converts USD into XRP → XRP is sent to Mexico → A Mexican bank converts XRP into pesos.

In this process, XRPL’s consensus mechanism (which does not rely on Proof of Work) ensures that transactions are confirmed within 3 to 5 seconds—significantly faster than Bitcoin (10 minutes) or traditional banking systems. Additionally, it eliminates the need for pre-funded accounts, reducing capital constraints and foreign exchange risks, while keeping transaction costs extremely low.

4. RippleNet——Global payment network

RippleNet is a global financial payment network built by Ripple, designed to connect banks, payment service providers, remittance companies, and other financial institutions to optimize cross-border payment processes. It is not a public blockchain network but rather a private, enterprise-level solution aimed at addressing inefficiencies in the traditional financial system.

（SWIFT vs. Ripple – the fight for better, faster, cheaper bank transfers）

RippleNet leverages blockchain technology to enable financial institutions worldwide to transfer funds efficiently, aiming to establish a unified global payment system. In traditional finance, there is no single global payment system; instead, various financial institutions operate isolated remittance networks for international payments. These fragmented systems lack interoperability, making cross-border transactions both expensive and time-consuming.

In today’s interconnected world, such outdated payment systems have become increasingly incompatible. Despite high transaction fees, users often have to wait weeks for payments to be processed, limiting access to international markets.

RippleNet seeks to address these issues by providing a decentralized global banking network accessible to all. By connecting to the network via application programming interfaces (APIs), users can transfer funds internationally faster and more affordably than through traditional methods. This decentralized network claims to process payments in just three seconds, leveraging the global reach of its native XRP token.

From a technical standpoint, RippleNet is a suite of products that utilize the functionalities of the XRP Ledger blockchain network rather than a standalone blockchain. This means that transactions conducted through RippleNet products are recorded on the XRP Ledger, but RippleNet itself is not a blockchain.

Additionally, RippleNet solves the need for pre-funded accounts in cross-border transactions through its On-Demand Liquidity (ODL) solution, which uses XRP to source liquidity. RippleNet supports nearly 100 countries and facilitates payments in over 120 fiat currency pairs, ensuring seamless transactions between nations.

Core Features and Advantages of RippleNet:

• Real-Time Settlement: Traditional cross-border payments rely on correspondent banking networks, often requiring multiple intermediary banks, leading to processing times of 1–5 days. In contrast, RippleNet enables direct peer-to-peer transactions, completing confirmations within seconds.
• Standardized Framework: RippleNet offers standardized APIs and protocols, such as the Interledger Protocol (ILP), allowing financial institutions across different countries to integrate seamlessly while addressing format and compliance discrepancies.
• Multi-Currency Support: It facilitates instant conversion between fiat currencies, cryptocurrencies, and even commodities like gold, eliminating the need for intermediary currencies (such as the U.S. dollar) as a bridge.
• Cost Reduction: By reducing intermediaries and eliminating the need for pre-funded liquidity accounts, RippleNet lowers cross-border payment costs by up to 60%.

RippleNet is further divided into several key products: xCurrent, xRapid, and xVia.

4.1 xCurrent

xCurrent is designed for banks, providing cross-border payments at a lower cost compared to traditional international settlement systems. Banks connect through an application programming interface (API), enabling them to transition from conventional payment methods to an XRP-powered blockchain alternative.

xCurrent is built to align with banks’ existing compliance and risk management frameworks, ensuring a seamless integration process. According to xCurrent documentation, this solution complies with all current regulatory requirements, including Know Your Customer (KYC) and Anti-Money Laundering (AML) policies.

4.2 xRapid

While xCurrent facilitates low-cost and fast cross-border payments, xRapid ensures liquidity through XRP tokens. Traditional financing methods require businesses to pre-fund foreign accounts, as converting one fiat currency to another can take weeks.

xRapid enables near-instantaneous currency conversion, providing on-demand liquidity and eliminating the need for businesses to maintain pre-funded overseas accounts. Instead, funds remain within their own accounts until a transaction occurs.

4.3 xVia

xVia serves as the API layer of RippleNet, allowing customers to seamlessly connect to the aforementioned services. xVia enables payments to be sent with additional transaction details, such as invoices and other supporting documents.

According to RippleNet documentation, additional advantages of RippleNet include supply chain payment management, international bill payments, real-time remittances, peer-to-peer transactions, cash pooling, and global currency accounts.

（Why the Momentum for Ripple XRP’s Use Case Continues to Gather Pace）

RippleNet’s operational process (using cross-border remittances as an example):

1. Initiation: Bank A (United States) initiates a transfer request to Bank B (Mexico) through RippleNet.
2. Routing and Verification: RippleNet automatically selects the most efficient route, either through a direct connection or via a liquidity provider.
3. Settlement: If On-Demand Liquidity (ODL) is used, Bank A converts USD to XRP, sends it to Bank B, which then instantly converts XRP into Mexican pesos.
4. Completion: Funds are settled within seconds without requiring either party to pre-fund the recipient’s currency.

4.4 Who uses RippleNet?

Although RippleNet presents itself as a globally operating network, many may wonder how many banks actually use the service. Currently, more than 300 financial institutions worldwide, including Santander and SBI Remit (Japan), are part of the RippleNet ecosystem.

（Ripple Digital Asset Report: XRP Review And Investment Grade）

Ripple has stated that hundreds of banks are using its services, ranging from small entities to global financial institutions. For example, Bank of America, Santander, and American Express are among the major corporations utilizing RippleNet. Santander, in particular, has processed over 450 million euros through RippleNet across six European countries and the United States.

5. RLUSD Stablecoin

5.1 The Role of Stablecoins

Ripple is at the forefront of financial innovation, not only creating compliant, scalable, and enterprise-grade solutions but also bridging traditional finance with digital assets through its recently launched RLUSD stablecoin. The introduction of RLUSD, with a focus on regulatory compliance, offers customers and users the opportunity to benefit from the stability and transparency uniquely provided by Ripple. This marks an important milestone in Ripple’s journey toward building global financial services and supporting the Internet of Value.

RLUSD will be seamlessly integrated with both the XRP Ledger and the Ethereum network, serving as a foundational asset for enterprises to develop additional blockchain solutions. It provides a secure, fast, and scalable infrastructure for stablecoins while supporting issuance, trading, and payments with the following key features:

• Native Stablecoin Support: XRPL natively supports stablecoins without requiring complex smart contracts.
• Automatic Bridging and DEX Integration: Stablecoins on XRPL can benefit from deep liquidity and seamless foreign exchange swaps.
• Institutional DeFi Applications: RLUSD and other stablecoins can be utilized for lending, tokenizing real-world assets (RWA), and cross-border settlements.

（Chainlink partnership brings RLUSD utility to DeFi; Source: Chainlink）

This integration enables Ripple USD stablecoin to serve various purposes across multiple sectors:

• Fiat-to-Crypto Gateway: Facilitates seamless conversions between fiat currencies and cryptocurrencies for users, traders, and businesses.
• Global Remittances: Enables fast and cost-effective international transactions for individuals and businesses.
• Everyday Transactions: Provides a reliable means of daily transactions as an alternative to cash or credit cards.
• RWA Tokenization: Can serve as collateral for tokenized assets on XRPL and facilitate transactions involving them.
• DeFi Integration: Allows users to utilize RLUSD for trading, yield farming, staking, and loan collateral on XRPL and Ethereum-based dApps and DeFi platforms.

5.2 The Significance of RLUSD

The launch of RLUSD represents a significant step in Ripple’s strategic roadmap, reinforcing its leadership in cross-border payments while expanding into a broader financial ecosystem. As the global stablecoin market continues to grow rapidly, RLUSD directly addresses financial institutions’ demand for low-volatility crypto instruments. While XRP offers advantages in speed and cost for cross-border settlements, its price volatility remains a concern for more conservative institutions. By being fully backed 1:1 by U.S. dollar reserves and short-term government securities, RLUSD provides a compliant and stable settlement option that complements XRP, allowing RippleNet users to choose settlement methods based on their risk preferences, further optimizing capital efficiency and transaction experience.

This move also reflects Ripple’s proactive approach to regulatory compliance. With ongoing legal disputes between the SEC and XRP yet to be fully resolved, RLUSD aims to mitigate potential compliance risks through transparent audits and adherence to U.S. regulatory frameworks, helping to maintain institutional trust. Additionally, Ripple has positioned RLUSD as a multi-chain asset, planning to deploy it on both the XRP Ledger and Ethereum. This not only enhances cross-chain interoperability within its payment network but also lays the groundwork for potential involvement in central bank digital currencies (CBDCs) and institutional DeFi markets. For instance, RLUSD could act as a bridge between traditional finance and emerging on-chain assets like tokenized government bonds and collateralized lending, giving Ripple an early advantage in regulated financial innovation.

From a market competition standpoint, RLUSD benefits from RippleNet’s existing network of over 300 financial institutions, providing a strong distribution channel for rapid adoption. Compared to general-purpose stablecoins like USDT and USDC, RLUSD is more focused on vertically integrating cross-border payment solutions. Leveraging XRPL’s low-cost and high-speed infrastructure, RLUSD is particularly well-suited for high-frequency cross-border settlement scenarios. Furthermore, the launch of RLUSD is also seen as a key driver for Ripple’s ecosystem expansion—by attracting developers to build stablecoin-related DeFi applications on XRPL, it indirectly enhances XRP’s utility and on-chain activity, creating a synergistic effect within the ecosystem.

However, this strategy faces several challenges. Regulatory uncertainties, such as the advancement of the U.S. Stablecoin Act, intense competition with established stablecoins, and the pressure to maintain transparency in reserve assets, could all impact RLUSD’s market acceptance. If Ripple can successfully balance technological innovation, regulatory compliance, and customer demand, RLUSD could become a cornerstone in its transition from a payment service provider to a comprehensive financial infrastructure. However, achieving this goal will require time and further market validation.

6. Final summary

Ripple is a Web2 fintech private company that launched the XRP Ledger blockchain network, with XRP serving as its native token. Ripple’s core technology is the XRPL ledger, a distributed ledger technology (DLT), where XRP functions as a utility token operating within the network.

At the same time, Ripple has integrated its years of expertise in cross-border payment solutions to introduce RippleNet, a payment solution designed for financial institutions, focusing on improving efficiency and reducing costs. Some of RippleNet’s services are powered by the XRP Ledger blockchain network.

XRP is an independent cryptocurrency that acts as an efficient bridge currency within RippleNet, but its value and use cases extend far beyond Ripple’s business scope. Their relationship can be likened to a “highway (RippleNet)” and “fuel (XRP),” though XRP can also be utilized independently in various other scenarios.

The introduction of RLUSD is seen as a crucial step in expanding Ripple’s ecosystem. By attracting developers to build stablecoin-related DeFi applications on XRPL, RLUSD indirectly enhances the utility and on-chain activity of XRP. Additionally, RLUSD has the potential to extend beyond the XRP ecosystem, fostering broader synergies across the digital asset space.

Disclaimer：

1. This article is reproduced from [Web3 Xiaolu]，The copyright belongs to the original author [will Awang]. If you have any objection to the reprint, please contact Gate Learn team, the team will handle it as soon as possible according to relevant procedures.

2. Disclaimer: The views and opinions expressed in this article represent only the author’s personal views and do not constitute any investment advice.

3. Other language versions of the article are translated by the Gate Learn team, not mentioned in Gate.io, the translated article may not be reproduced, distributed or plagiarized.