Is XRP losing its on-chain momentum? Ripple’s Chief Technology Officer, David Schwartz, has addressed the surprising 30-40% decline in XRP Ledger (XRPL) transaction volumes, pointing to off-chain settlements as the primary cause. This revelation has sparked debates about XRP’s real-world utility and institutional adoption.
Why Is XRP On-Chain Volume Dropping?
Ripple’s Q1 2025 XRP Markets Report revealed a significant decline in on-chain activity, including reduced wallet creation and transaction volume. Schwartz explained that many financial institutions prefer off-chain settlements for efficiency and regulatory compliance. Key factors include:
- Faster transaction processing off-chain
- Reduced regulatory scrutiny
- Lower operational costs
Ripple CTO Defends XRP’s Institutional Adoption
Despite criticism from figures like Andrei Jikh, Schwartz emphasized that Ripple’s 300+ financial partners still utilize XRP—just not always on-chain. He acknowledged transparency challenges but hinted at a future shift toward blockchain-based transactions.
XRP Ledger DeFi Shows Resilience
While on-chain payments declined, XRPL’s DeFi ecosystem saw only a 16% drop in DEX volume. However, with just $81.8 million in Total Value Locked (TVL), institutional activity remains largely invisible on-chain.
What’s Next for XRP and Ripple?
Ripple plans to discontinue its quarterly XRP Markets Report, opting for alternative transparency measures. Schwartz also mentioned exploring “permissioned domains” to address terrorism financing risks without elaborating further.
FAQs
Why did XRP on-chain volume drop by 30-40%?
Ripple’s CTO attributes this to financial institutions settling transactions off-chain for speed and compliance.
Does this mean XRP is failing?
No—Ripple confirms institutional usage continues, just not always on the public ledger.
What is the future of XRP Ledger?
Schwartz suggests institutions may gradually shift to on-chain transactions as blockchain benefits become clearer.
How does this affect XRP investors?
The long-term impact depends on whether Ripple can balance institutional needs with blockchain transparency.
