XRP Soars: Why No VC Funding, No Smart Contracts, and Low User Numbers Have Fueled an $180 Billion Market Cap?
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XRP Soars: Why No VC Funding, No Smart Contracts, and Low User Numbers Have Fueled an $180 Billion Market Cap?
The logic of the market is never wrong.
Navigating Web3 tides with focused insightsAuthor: goodalexander
Translation: TechFlow
Why does XRP cause "brain damage"?
In the cryptocurrency space, XRP's existence challenges many conventional narratives—especially mainstream views about venture capital (VC) and protocol value.
The initial belief was that "VCs always tend to dump, so choosing meme coins is a strategy to resist VCs." However, this idea is now being overturned. In reality, what truly resists VC influence are not meme coins, but protocols with stable cash flows and long-standing, U.S.-based protocols—often referred to as "dino coins."
First, Hyperliquid demonstrated how a cash-flow-driven startup can succeed through community distribution. Jeff initially funded the project with his own trading profits, proving that it’s possible to build a community-oriented distribution model without relying on VC backing.
Second, XRP further shows that crypto whales care more about protocol reliability—and reliability is closely tied to how long a protocol has existed. The XRP case directly challenges core VC assumptions, particularly these points that VCs find unacceptable:
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No VC exposure: XRP received almost no investment from VCs, meaning they cannot profit from it.
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Lack of smart contract technology: XRP does not rely on smart contracts, which contradicts the technological logic underpinning most VC investments.
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Mismatch between user count and valuation: XRP has only 20,000 active sending wallets, yet boasts an $180 billion market cap—directly contradicting the traditional belief that "protocol value requires massive user adoption."
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Focus on transaction sending: XRP’s core function is sending transactions. This singular, high-efficiency functionality makes multi-functional protocols appear inferior by comparison.
The XRP/SOL "God Candle" Incident and Regulatory Warnings
The XRP/SOL "god candle" event—where prices surged dramatically—occurred simultaneously with live broadcasts on Pump.fun showing human exploitation, human trafficking, and attempted suicide. These incidents prompted reflection: when a protocol has massive user adoption but lacks censorship mechanisms, it risks enabling extremely negative outcomes, including illegal activities and social harm. Such scenarios inevitably attract scrutiny from regulators or law enforcement.
This brings us to another controversial feature of XRP: Trust Lines. Trust Lines require users to actively establish trust before accepting a token. This means users cannot arbitrarily send "racist tokens" or other undesirable assets to any address. While criticized as creating "high-friction" user experience (UX), this design effectively blocks low-quality use cases while serving the needs of high-quality users—such as banks. As the market increasingly recognizes the dangers of lacking such safeguards, this mechanism is gaining broader acceptance.
Bitcoin (BTC) sees almost no application in such contexts, yet still performs far better than Ethereum (ETH)—despite ETH’s claims of "powering Web3." This marks the early stage of a market shift. The SOL livestream incident helped people truly understand what "mass adoption beyond just buying" looks like—and highlighted the importance of compliance.
Another key shift: since Trump's election, aggressive enforcement regimes have effectively ended. This transforms U.S.-based protocols from entities facing existential risk into ones protected by the "navy"—i.e., backed by state power. Any attempt to censor Ripple Labs may now face strong resistance from the U.S. government.
XRP’s greatest historical risk was that the U.S. government might accuse its Unique Node List (UNL) of facilitating money transmission, impose OFAC fines, and have the SEC sue every validator to force compliance. But as the regulatory environment shifts, these risks are turning into advantages for XRP.
Protocols facing similar risks—like Cardano and XLM—are also taking more proactive steps. Today, the U.S. regulatory landscape increasingly views them as critical tools against censorship.
Additionally, the United States’ unique position in the global financial system amplifies this trend. The U.S. is one of the world’s hubs for anonymous cash, because foreign governments struggle to enforce reporting requirements on U.S. financial institutions. Tether can be seen as the on-chain extension of this logic—a semi-compliant, $135 billion cash reserve pool. So long as these assets are denominated in U.S. dollars, the U.S. government disregards foreign reporting demands. This explains why Tether shut down operations in Europe.
The U.S. aims to strengthen the dollar’s global dominance through financial innovation in crypto. Thus, XRP’s development has shifted from being "marginalized" to becoming part of U.S. government policy.
Although recent price movements in XRP are sometimes attributed to retail investors, in reality—especially for long-established assets—ownership is highly concentrated. Most whales in the network have not sold at current prices, despite ample market liquidity enabling them to do so. This indicates continued confidence in XRP’s future, driven by the multiple factors outlined above.
The market is never wrong. Our job is to understand it as best we can—and learn from it.
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@goodalexander
