Experts Debate: Does Ripple’s ODL Truly Influence the Price of XRP?
Ripple’s payment system, known as On-Demand Liquidity (ODL), has been a topic of debate within the XRP community. Panos Mekras, a well-known figure in the crypto industry, recently argued that ODL does not directly impact the price of XRP. He pointed out that Ripple promotes its products, including ODL, but investors make independent decisions when purchasing XRP and do not solely rely on Ripple’s efforts.
Mekras also highlighted that most ODL transactions involve immediate buying and selling of XRP, which does not generate significant demand for XRP from ODL itself. This aligns with Ripple’s submission to the SEC, where they stated that most ODL transactions are demand-neutral and do not affect XRP’s price. Additionally, Mekras pointed out that a significant portion of the XRP used for ODL comes from Ripple’s escrow, which introduces additional selling pressure by injecting “new” XRP tokens into the market.
Based on these observations, Mekras concluded that Ripple’s payment solution alone cannot drive up the price of XRP.
Ripple, on the other hand, provided a document to the SEC stating that most transactions using ODL do not impact XRP’s price. They argue that the value of XRP is not heavily influenced by speculative trading but rather by its practical use in cross-border payments. This supports Ripple’s claim that XRP has utility beyond market speculation.
However, another member of the XRP community, Nietzbux, offered a different perspective. He emphasized the importance of market liquidity and a strong XRP value for effective ODL. Nietzbux suggested that expanding the uses of XRP could boost demand, rather than relying solely on Ripple’s efforts.
He questioned the logic of the argument that ODL will never raise the price of XRP, stating that it implies Ripple is relying on the community to generate the necessary demand and price increase for XRP. Nietzbux presented a hypothetical scenario where a large bank wants to transfer $100 billion using XRP but faces challenges due to the lack of liquidity. He urged reflection on why major banks have not fully embraced ODL and why the volume of ODL transactions remains low compared to XRP’s total trading volume.
In conclusion, the debate within the XRP community revolves around the impact of Ripple’s ODL on the price of XRP. While Mekras argues that ODL alone cannot raise the price of XRP, Ripple maintains that the value of XRP comes from its practical use in cross-border payments. Nietzbux emphasizes the importance of market liquidity and a strong XRP value for effective ODL. The discussion highlights the complexities of the relationship between XRP price, Ripple’s promotion, and ODL volume.