Why does XRP make people "short-circuit"?
In the cryptocurrency field, the existence of XRP has disrupted many traditional narratives, especially the mainstream views on venture capital (VC) and protocol value.
The initial view was that "VCs are always inclined to sell, so choosing MEME coins is a strategy to counter VCs." However, this view is being gradually overturned. It turns out that what can truly counter VCs are not MEME coins, but protocols with stable cash flows and long-term protocols based in the US (often referred to as "dinosaur coins" or Dino coins).
First, Hyperliquid has shown how cash flow-driven startups can achieve success through community distribution. Jeff initially supported the project with his own trading capital, proving that a community-oriented distribution model can be established without relying on VC support.
Secondly, XRP further demonstrates that crypto whales are more concerned with the reliability of protocols, and this reliability is closely related to the existence time of the protocol. The case of XRP challenges the core assumptions of VCs, particularly the following points that VCs find unacceptable:
- No VC exposure: XRP has almost no VC investment, so VCs cannot profit from it.
- Lack of smart contract technology: XRP does not rely on smart contracts, which is contrary to the technological logic of most VC investments.
- Contradiction between user numbers and value: XRP has only 20,000 active sending wallets, yet it has a market capitalization of up to $180 billion, which is completely opposite to the traditional view that "protocol value requires a large user base".
- Focus on transaction sending: The core function of XRP is to send transactions, and this high efficiency of a single function makes other multi-functional protocols appear inferior.
The "candle" event of XRP/SOL and the warning of regulation
The "candle" event (i.e., the sudden surge in price) of XRP/SOL occurred at the same time as the incidents of human exploitation, human trafficking, and suicide attempts that appeared in the Pump.fun live broadcast. These events have led people to reflect: When a protocol has a large number of users but lacks a review mechanism, it may lead to extremely negative consequences, including the proliferation of illegal activities and the deterioration of social problems. This situation will eventually attract the attention of regulatory authorities or law enforcement agencies.
This brings up another controversial feature of XRP: Trust Lines. Trust Lines require users to actively establish a trust relationship before accepting a certain token. This means that users cannot arbitrarily send "racist tokens" or other unwelcome tokens to any address. Although this design has been criticized as a "high-friction" user experience (UX), it effectively prevents low-quality usage while meeting the needs of high-quality users (such as banks). As the market gradually recognizes the problems that may arise without these safeguards, this mechanism is being increasingly accepted.
Bitcoin (BTC) has almost no application in such scenarios, but its performance still far exceeds Ethereum (ETH), even though the latter claims to be able to "drive Web3". This is the initial stage of market changes, but the live broadcast incident of SOL has made people truly understand what "mass adoption beyond just buying" looks like and realize the importance of compliance.
Another important change is that the radical enforcement regime has actually ended since the election of Trump. This has turned the US-based protocols from facing survival risks to being "protected by the Navy". Any attempt to censor Ripple Labs is likely to face strong opposition from the US government.
The biggest risk XRP once faced was that the US government could accuse its Unique Node List (UNL) of being involved in money transmission and impose OFAC fines, while having the SEC sue each validator to force compliance. However, with the change in the regulatory environment, these risks have gradually turned into advantages for XRP.
Protocols with similar risks (such as Cardano and XLM) have also taken more proactive actions as a result. Nowadays, the regulatory environment in the US has actually come to see it as an important tool to resist censorship.
Furthermore, the special position of the US in the global financial system has also influenced this trend. The US is one of the centers of global anonymous cash, as other countries find it difficult to enforce reporting requirements on US financial institutions. Tether can be seen as an on-chain extension of this logic - a cash reserve pool of up to $135 billion, semi-compliant. As long as these assets are denominated in US dollars, the US government will not care about the reporting requirements of other countries. This is also the reason behind Tether's closure of its business in Europe.
The US wants to strengthen the global dominance of the US dollar through financial innovation in the cryptocurrency field. XRP's R&D activities have therefore shifted from "marginalization" to becoming part of the US government's policy.
Although the recent price fluctuations of XRP have been attributed by some to retail investors, in reality, especially for long-standing cryptocurrencies, their holdings are highly concentrated. Most of the whales in the network have not sold at the current price, even though the market liquidity fully allows them to do so. This indicates that they still have confidence in the future of XRP, and this confidence stems from the multiple factors mentioned above.
The logic of the market is never wrong, and our task is to understand it as much as possible and learn from it.
