Written by: Xiaobing
On October 3, during the Korea Blockchain Week in Seoul, Ripple President Monica Long said something that the community chewed over and over during a fireside chat at the XRP Seoul event: "A credit-related pilot is underway, with the goal of activation next year. Let XRP be deposited into the liquidity pool of the lending protocol and used as collateral to fund customers' payment obligations."
She added: “Payments, credit, the XRP ledger and lending protocols will be connected together.”
Why should this passage be taken seriously? Because it points directly to a core problem that has troubled XRP holders for many years: Ripple's business can be very large, but the price of XRP may not rise accordingly. And the credit model is, at least in theory, the first design that might break this disconnect.
XRP’s Biggest Structural Conundrum: Speed Issues
Understanding why this credit program is important requires understanding that XRP has long faced a structural dilemma known as the "velocity problem."
XRP is designed as a “bridge asset” for cross-border payments.
Here’s how it works: Bank A exchanges USD for XRP, the XRP travels across the Ripple network within seconds, and Bank B exchanges the XRP for Japanese yen on the other end. During this entire process, XRP may be held for only three to five seconds.
This means that even if the Ripple network handles billions of dollars in payment volume every day, the need to hold XRP can be extremely low. Money is flowing, but the token is just being “borrowed” and no one needs to actually hold it. Trader Peter Brandt once called XRP a “fool coin” because of this, arguing that there is a fundamental disconnect between the busyness of the network and the value of the token.
The data also supports this view. According to the XRP Academy's utility valuation model, if XRP is only used as a bridge asset, its pure utility value is only about $0.0002. A large part of the current price of $1.50 is speculative premium and ecological expectations, rather than real holding demand generated by the payment business.
What’s even more troublesome is that Ripple’s own stablecoin RLUSD 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 wildly.
This is why Ripple has signed more and more bank partners and the payment network processing volume continues to grow, but the price of XRP has dropped from a high of $3.65 in July 2025 to around $1.50 now, a drop of more than 60%. There is a lack of a mandatory transmission chain between business growth and currency price growth.
Why might the credit model be different?
The credit model described by Monica Long 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 pool of the lending protocol and locked as collateral for a period of time to provide short-term financing for customer payment obligations. Tokenized funds enable “24-hour collateral access and real-time lending,” Long mentioned.
Lockdown means slower speeds. Decreased speed means more XRP needs to be held in the system rather than flowing through it quickly. If institutions need to continue to hold a large amount of XRP as collateral reserves in order to participate in credit business, then the demand for XRP changes from "instantaneous circulation demand" to "continuous inventory demand."
Let’s use an analogy to understand: XRP in bridge mode is like change at a highway toll booth. The money is gone as soon as you get it; XRP in credit mode is like reserves in a bank’s vault, which must always be kept there for business to operate.
This is the first time in the history of XRP that a business design has emerged that could potentially pull the “velocity variable” from extremely high values to low to medium values. If the speed really drops, according to the utility valuation formula (price = trading volume / circulation × speed), the same trading volume can support a higher token price.
Assuming that the credit business is launched as scheduled in 2027, will the price of XRP be able to keep pace with Ripple's business growth? This depends on several key conditions.
Is XRP irreplaceable collateral? If institutions can use RLUSD, U.S. Treasury tokenized funds, or other assets as collateral, then the growth of credit business will not necessarily bring about the demand for XRP lock-up. Only when XRP is a "necessary" rather than an "optional" in the credit pool, business growth can be directly transmitted to the currency price.
Whether the lock-up scale is large enough to affect the circulation plate. The circulating supply of XRP is approximately 57 billion, with a total supply cap of 100 billion. Even if there were hundreds of millions of dollars of XRP locked up in credit pools, the fraction would likely still be small relative to the total circulating supply. A multi-billion dollar level of lock-in would be required to have a measurable impact on supply and demand.
The paradox of credit cycles and XRP volatility. There are inherent tensions in using a highly volatile asset as credit collateral. If XRP prices fall significantly during a credit cycle, the value of collateral shrinks, potentially triggering a chain of liquidations. This problem comes up again and again in DeFi lending. How Ripple addresses this issue in product design will determine how large the credit business can scale.
From Bridges to Vaults: A Critical Shift in the XRP Narrative
Putting Monica Long's speech in Seoul into a longer timeline, Ripple is attempting a fundamental shift in XRP's positioning: from a "pass-through tool for payment" to a "productive asset in financial infrastructure."
Under the bridge mode, the value proposition of XRP is "faster than SWIFT"; under the credit mode, the value proposition of XRP becomes "by holding XRP, you can obtain the credit capabilities needed to operate the payment business." The former contributes minimally to holding demand, while the latter, at least in theory, creates ongoing lock-in demand.
Whether this shift will be successful or not, a preliminary answer will be given in 2027. Prior to this, the price of XRP was still mainly driven by market sentiment and macro liquidity, and the transmission chain with Ripple's business progress was still weak.
What Monica Long said, "Connecting payments, credit, the XRP ledger and lending protocols" is a blueprint. What stands between blueprints and buildings are engineering, regulatory and market validation. But at least this time, the blueprint is in the right direction, and it finally points to XRP’s core structural weakness.