XRP has gone parabolic in recent weeks. After a 4x price surge in just 30 days, price reached levels not seen since 2018. Blink and suddenly XRP is the 3rd ranked coin by market cap, flipping Solana.
In fact, XRP’s circulating market cap is at an all-time high.
Active accounts are also at an all-time high.
In this article we’ll break down why XRP is having it’s moment and what DeFi exists on XRPL today, for the DeFi enthusiast.
Why XRP Is Having Its Moment
Remember the crypto regulatory drama of 2023? Ripple stood up and fought the good fight. That partial victory against the SEC didn't just clear some clouds; it gave XRP something most crypto projects would kill for: regulatory clarity.
And now? The macro environment is heating up. Trump is throwing gasoline on the crypto fire with talks about eliminating capital gains taxes for American crypto companies, and a new crypto-friendly SEC chair could be a gamechanger for the industry.
For a project like Ripple, which has spent years building relationships with traditional finance and focusing on compliance, this is like hitting the jackpot.
The XRP Ledger (XRPL): Not Your Average Blockchain
Instead of the usual Proof of Work or Proof of Stake that we're all used to, XRPL runs on something called federated consensus. Instead of miners competing to verify transactions, XRPL uses a network of validator nodes that have to agree on everything. At least 80% need to say "yeah, that looks good" before any transaction goes through.
Anyone can run a validator node, but Ripple maintains a special list called the Unique Node List (UNL) of trusted validators.
Is it as decentralized as Ethereum? Nope. Is it especially high throughput? Not compared to newer chains like Solana and Sui.
But it's practically free to use. 0.00001 XRP per transaction.
Quick refresher on XRPL:
XRP is the native token and the ticker symbol of the XRP Ledger
XRP Ledger (XRPL) is the distributed consensus ledger
Ripple Labs is the company behind Ripple Network
Ripple Network is a global payment network built on top of the XRP Ledger
XRPL Architecture
While most modern Layer 1 blockchains like Ethereum and Solana are built around smart contract functionality, XRPL takes a fundamentally different approach. Instead of supporting general-purpose smart contracts, XRPL bakes key functionality directly into the protocol layer.
XRPL maintains programmability through three main mechanisms.
Built-in Protocol Features
Native DEX functionality
Automated Market Maker (AMM)
Escrow systems
Payment channels
Trust lines for token issuance
These aren't "smart contracts" in the traditional sense - they're core protocol features that don't require additional programming.
WebAssembly Hooks
Think of these as lightweight, specialized smart contracts. They allow specific types of transaction logic but are more limited than Ethereum's Turing-complete contracts. Currently, these are implemented on the Xahau fork of XRPL, with ongoing discussion about mainnet integration.
EVM Sidechain (In Development)
To bridge this functionality gap, Ripple is developing an EVM-compatible sidechain. This would allow XRPL to support traditional smart contracts while keeping the main chain focused on its core strengths.
Note: Axelar is powering the bridge between XRPL and EVM chains. If the sidechain gains traction, Axelar could be a major beneficiary.
XRPL's design choices reflect its original focus on payment infrastructure. By building key features into the protocol rather than relying on smart contracts, XRPL can achieve:
Predictable performance
Lower transaction costs
Simplified consensus process
Reduced attack surface
This is how DeFi applications can function on XRPL - they leverage these built-in features rather than deploying smart contracts.
