XRP is one of the most popular cryptocurrencies worldwide. Its market cap is neck-and-neck with BNB to rank number four by this metric.
Its main use case is fast, low-fee cross-border payments, but the XRP Ledger is opening up an entirely new use case for XRP tokens—decentralized finance (DeFi).
The February update from the official team at Ripple Labs signals a significant shift in the ecosystem’s fortunes. But real quick, before diving into the update—
Here’s how XRP’s price reacted after Ripple released the update on these exciting new developments: on Friday, Feb. 13, XRP traded for a daily average price of $1.35 before it surged to over $1.65 on Sunday.
“Institutional DeFi on XRPL”
The Ripple Labs update teased “Institutional DeFi on XRPL,” in a headline that promised the network will scale real-world finance with XRP at the core. The key selling point for Ripple investors and developers in this announcement is that these updates make the XRP Ledger well-suited for institutional-grade players.
Serious financial firms with big clients in New York City and London can rely on this technology to better meet the needs of their business. Or at the very least, that’s what the XRP team states. The note opened with a quick TLDR; summary highlighting XRP’s utility in liquidity and credit markets as well as for payments.
This referred to On-Demand Liquidity (ODL) powered by Ripple. This platform feature allows large institutions or individuals moving large funds to send them via RippleNet using XRP tokens.
But the exciting updates included:
- MPT (fungible Multi-Purpose Tokens for RWA tokenization)
- Permissioned Domains for access management
- Lending Protocol for native on-ledger XRP credit markets
- Confidential Transfers for institutional-grade privacy
- Ripple support for foreign exchange (FX) markets
Meanwhile, sophisticated new tools such as Credentials, Token Escrow, and Batch Transactions will help enterprise-grade clients stay compliant with financial regulators and automate on-chain workflows.
“The foundation for the next generation of blockchain-based financial infrastructure is being built, with XRP as the backbone,” Ripple Labs said.
Fine-Tuning XRP Utility to Purpose
In addition to the feature set for institutions, which forms the backbone of the next-generation XRP ecosystem on the ledger, Ripple also announced that XRPL now comes equipped with new developer tools to keep open development humming along.
Livenet Explorer is a developer tool that enables institutions and blockchain developers to visualize real-time on-chain activity, balances, and token flows. Meanwhile, XRPL Devnet Tools will help blockchain developers test features such as MPTs, escrow contracts, batch transactions, and lending protocols before deploying Dapps to the mainnet.
On the payments and FX side, permissioned domains will help build walled-off environments on the open blockchain with controlled credentials. Moreover, this can support KYC and AML tools for regulatory compliance.
XRPL is also getting ready to unlock balance sheets by optimizing collateral and capital velocity. This will be possible through token escrow for conditional settlement programmed right into XRP smart contracts.
One of Ripple’s big points in the February update is MPTs, or Multi-Purpose Tokens. Ripple says MPTs are the future of tokenization on XRPL. They can support sophisticated financial instruments such as bonds and funds while also handling metadata and parameters without requiring custom contracts.
What It Means for XRP Prices
For institutional and independent blockchain developers, here are some considerable developments. They may draw more participants and large financial firms into the XRP ecosystem.
But what does it mean for cryptocurrency investors?
During the week following the update announcement, XRP’s price outperformed the rest of the top 10 cryptocurrencies by market cap, indicating the market perceived the news positively.
However, as CryptoPotato reported, the state of the industry is currently predominantly negative in terms of price action. As a matter of fact, the popular Fear and Greed Index tapped Extreme Fear territory with a score of just 5 a few days ago – the lowest in the last eight years. During times like these, good news does not move markets as much as it does in bull markets.
While the update is undoubtedly sound and important, it is unlikely to cause any significant price change, at least in the short term.
The post Ripple’s February Ledger Update: What It Means for XRP Investors and Prices appeared first on CryptoPotato.
