David Schwartz Says XRP Should Gain if the XRP Ledger Succeeds. Is He Right?

Ripple CTO emeritus David Schwartz, a key architect behind the XRP Ledger, shared his thoughts on X on October 23, 2026. He stated that for the XRP Ledger to excel in the financial world, its native coin, XRP (CRYPTO: XRP), cannot remain undervalued.

“I think a world where XRPL is highly successful in financial applications, but XRP does not have high demand and value is very unlikely,” he wrote. He also mentioned an improbable scenario in which a single dominant settlement asset could exist.

However, traders appeared unfazed by Schwartz’s comments. On October 23, XRP closed at $1.29, down from an opening of $1.31. As of October 25, it rose slightly to $1.30, up 1.7% over 24 hours, but down 16.9% over the past month and 29.1% this year.

Schwartz still holds a position with Ripple, which controls a significant amount of XRP, making it important to evaluate his claims alongside the ledger’s functionality.

Schwartz Says XRP Is the Only Counterparty-Free Asset on the Ledger

Schwartz highlighted that XRP is the only asset on the XRP Ledger without an issuer backing it. This “counterparty-free” characteristic means XRP holders aren’t at risk of a company going under or freezing their assets, unlike Ripple USD (CRYPTO: RLUSD), Ripple’s dollar-pegged stablecoin, or other tokenized asset shares that rely on a company to issue them. Additionally, users need XRP to cover transaction fees.

He even expanded his argument to Bitcoin (CRYPTO: BTC). Schwartz suggested that even if Bitcoin becomes the primary settlement currency, a successful ledger would likely still feature many versions of wrapped Bitcoin (tokens representing Bitcoin held elsewhere). In this scenario, XRP could capture value by facilitating transactions between these tokens.

XRP Ledger Fees and Reserves Create Only Small XRP Demand

The first factor influencing demand for XRP is the destruction of a small amount of XRP with each transaction, known as fee burn. This mechanism is intended to prevent spam and could theoretically support the price by reducing the available supply.

However, because the standard transaction fee is only a tiny fraction of an XRP and increases only during network congestion, transferring large amounts of tokenized fund shares costs nearly the same as sending just one dollar, so large transfers burn barely more XRP than small ones.

The second factor involves account reserves. Each account on the XRP Ledger must maintain a minimum XRP balance, plus reserves for any objects it owns, such as trust lines or open offers. This locked-up XRP cannot be spent. As more users and activity grow, more XRP is set aside as reserves.

Nevertheless, validators can adjust the reserve requirements, and the ledger’s documentation emphasizes that it aims to stay compact enough to fit within a typical computer’s memory. If XRP’s value rises, validators could lower the reserve in XRP terms, limiting the demand this mechanism creates.

Bridging Is XRP’s Biggest Possible Source of Demand

The third area where XRP could see demand is through bridging. The ledger includes a built-in exchange with an order book and automated market makers (AMMs), allowing users to trade between two assets at a formula-determined price. When two tokens lack a strong trading market, transactions can flow through XRP as an intermediary, much like Ripple has long promoted for banks.

However, the demand for XRP in this role has its limits. Traders typically hold the bridging asset only briefly during trades, so total transaction volume doesn’t significantly affect the price. Ongoing demand comes primarily from market makers who hold XRP in their liquidity pools, and that inventory grows only if XRP trading pairs are used frequently.

RLUSD Could Let the XRP Ledger Win While XRP Stays Modest

A noteworthy alternative arises from Ripple’s own developments. If RLUSD became the ledger’s primary trading asset, institutions could exchange various tokenized assets directly against RLUSD. In that case, XRP might be relegated to transaction fees and reserves. Since banks typically account in dollars, a dollar-pegged stablecoin like RLUSD could easily become the go-to settlement asset, a claim Schwartz says is unlikely.

This scenario is already taking shape. In September 2025, Ripple partnered with DBS and Franklin Templeton (NYSE: BEN | BEN Price Prediction) to enable DBS to pair Franklin’s sgBENJI money market fund token directly with RLUSD. This leaves XRP as mere network fuel.

Moreover, Yellow’s chief executive announced plans to boost liquidity for both XRP and RLUSD within the ledger’s AMMs and order book. Yellow profits from trading on the ledger, so its strategy could further build RLUSD liquidity and intensify competition for XRP pairs.

Is David Schwartz Right That XRP Gains if the XRP Ledger Succeeds?

In part, yes. Schwartz is right that an XRP Ledger success would generate demand for XRP through fees, reserves, and liquidity within the protocol’s built-in liquidity pools. However, his analysis overlooked crucial factors like the burn rate, total reserves, and bridging volume. Moreover, fees and reserves are intentionally kept small, while bridging assets face direct competition from RLUSD. As a result, XRP holders may find themselves in a challenging position as Ripple continues to expand its ecosystem.

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