Ripple Wants to Use XRP for Credit: This Time, Can Business Growth Translate to the Token Price?

Written by: Xiao Bing

On October 3, during Korea Blockchain Week in Seoul, Ripple President Monica Long said something in a fireside chat at the XRP Seoul event that the community has been chewing over repeatedly: "Credit-related pilots are underway, with the goal of activating next year. XRP will be deposited into the liquidity pools of lending protocols, used as collateral to fund customers' payment obligations."

She added: "Payments, credit, the XRP Ledger, and lending protocols will all be connected together."

Why is this statement worth taking seriously? Because it points directly at a core problem that has troubled XRP holders for years: Ripple's business can grow very large, but the price of XRP doesn't necessarily follow. The credit model, at least in theory, is the first design that could break this disconnect.

XRP's Biggest Structural Problem: The Velocity Problem

To understand why this credit plan matters, you first need to understand a structural dilemma XRP has long faced, known as the "velocity problem."

XRP was designed as a "bridge asset" for cross-border payments.

Here's how it works: Bank A converts dollars into XRP, XRP crosses the Ripple network in seconds, and Bank B converts XRP into yen on the other end. Throughout this process, XRP may be held for only three to five seconds.

This means that even if the Ripple network processes billions of dollars in payment volume every day, the demand to hold XRP can be extremely low. Money is flowing, but the token is merely "borrowed as a passage" — no one actually needs to hold it. Trader Peter Brandt once called XRP a "fool coin" for this reason, arguing that there is a fundamental disconnect between the network's busyness and the token's value.

The data supports this view. According to XRP Academy's utility valuation model, if XRP is used only as a bridge asset, its pure utility value is only around $0.0002. A large portion of the current $1.50 price is speculative premium and ecosystem expectations, rather than real holding demand generated by the payment business.

What's more troublesome is that RLUSD, the stablecoin launched by Ripple itself, is also diverting XRP's bridge function. Banks can choose to use RLUSD, which has almost zero volatility, for cross-border settlement, instead of using XRP, whose price fluctuates sharply.

This is why Ripple has signed up more and more banking partners and its payment network processing volume keeps growing, yet XRP's price has fallen from its July 2025 high of $3.65 all the way down to around $1.50 now — a drop of more than 60%. Between business growth and token price growth, there is a missing mandatory transmission chain.

Why Might the Credit Model Be Different?

The credit model Monica Long described in Seoul has one fundamental difference from all previous XRP use cases: it requires XRP to be locked.

Under the traditional bridge payment model, XRP is held for a few seconds and then released. But under the credit collateral model, XRP is deposited into the liquidity pools of lending protocols, locked as collateral for a period of time, and used to provide short-term financing for customers' payment obligations. Long mentioned that tokenized funds can enable "24-hour collateral access and real-time lending."

Locking means velocity drops. A drop in velocity means more XRP needs to be held in the system, rather than flowing through quickly. If institutions need to continuously hold large amounts of XRP as collateral reserves to participate in the credit business, then the demand for XRP shifts from "instantaneous circulation demand" to "sustained inventory demand."

Here's an analogy to understand it: XRP under the bridge model is like loose change at a highway toll booth — the money passes through your hands and is gone. XRP under the credit model is like reserves in a bank vault — it must stay there at all times for the business to operate.

This is the first time in XRP's history that a business design has emerged that could pull the "velocity variable" from an extremely high value down to a medium-low value. If velocity really drops, then according to the utility valuation formula (price = transaction volume / circulating supply × velocity), the same transaction volume can support a higher token price.

Assuming the credit business launches on schedule in 2027, will XRP's price be able to move in sync with Ripple's business growth? This depends on several key conditions.

Whether XRP is an irreplaceable collateral. If institutions can use RLUSD, tokenized U.S. Treasury funds, or other assets as collateral, then the growth of the credit business does not necessarily bring locked demand for XRP. Only when XRP is a "necessity" rather than an "option" in the credit pool can business growth directly translate to the token price.

Whether the lock-up scale is enough to affect the circulating supply. XRP's circulating supply is about 57 billion tokens, with a total cap of 100 billion. Even if hundreds of millions of dollars' worth of XRP are locked in credit pools, the proportion relative to total circulating supply may still be very small. It would take lock-up volumes in the billions of dollars to produce a perceptible impact on supply and demand.

The contradiction between credit cycles and XRP's volatility. Using a highly volatile asset as credit collateral inherently carries tension. If XRP's price drops sharply during a credit cycle, the collateral value shrinks and could trigger cascading liquidations. This problem has repeatedly appeared in DeFi lending. How Ripple solves this problem in its product design will determine how large the credit business can scale.

From Bridge to Vault: A Key Pivot in XRP's Narrative

Looking at Monica Long's remarks in Seoul on a longer timeline, Ripple is attempting a fundamental repositioning of XRP: from a "pass-through tool for payments" to a "productive asset in financial infrastructure."

Under the bridge model, XRP's value proposition is "faster than SWIFT." Under the credit model, XRP's value proposition becomes "hold XRP, and you gain the credit capacity needed to operate a payment business." The former contributes very little to holding demand, while the latter, at least in theory, creates sustained locked demand.

Whether this pivot succeeds will get a preliminary answer in 2027. Before then, XRP's price will still be driven mainly by market sentiment and macro liquidity, and the transmission chain to Ripple's business progress will remain weak.

Monica Long's statement about "connecting payments, credit, the XRP Ledger, and lending protocols" is a blueprint. Between a blueprint and a building lie engineering, regulation, and market validation. But at least this time, the blueprint points in the right direction — it finally targets XRP's most core structural weakness.