Introduction
With a market capitalization of over $190 billion, XRP surpasses top public chains like BNB and Solana to become the third-largest cryptocurrency in the world. However, its seemingly strong ecosystem has failed to produce excellent DeFi applications.
In terms of DEXs, Ethereum has the famous Uniswap, while BSC is backed by Binance's Pancakeswap. In contrast, the XRPL ecosystem has only the $XRP token with higher recognition. Therefore, this article will explore the current status of the XRPL ecosystem and analyze whether emerging DEXs can break the existing deadlock.
Introduction to XRPL
XRP Ledger (XRPL) is an open-source blockchain launched in 2012, which broke the mainstream consensus mechanism dominated by PoW at that time with its unique XRP Ledger consensus protocol. This consensus operates through a node voting mechanism, where nodes (typically financial institutions) jointly confirm transactions.
XRP Ledger can maintain a throughput of 1,500 transactions per second while ensuring that the cost of each transaction is less than $0.001. Furthermore, XRP was ruled by a U.S. court in 2023 as a non-security token, indicating that it has initially passed regulatory restrictions. However, despite these advantages, the ecosystem has yet to experience a thriving DeFi development.
Current leading player Sologenic
Sologenic is currently the leading DEX in the XRPL ecosystem, dedicated to providing a comprehensive trading experience. The platform currently allows trading of over 100 ecosystem-related tokens and NFTs, and enables operations such as cross-chain transactions and liquidity pool creation.
The Sologenic platform supports its own wallet Solo DEX and relevant wallets that support the XRP blockchain, such as Ledger Device and Xaman App. It can be seen that XRP does not support common Web3 wallets like MetaMask and OKX Wallet, which indirectly reduces the visibility of the XRP ecosystem.
Performance of the Sologenic platform
Since its establishment, the platform has accumulated over 400,000 users and has achieved over $200 million in transaction volume every month. While $200 million seems large, a review of CoinMarketCap's DEX rankings reveals that the top ten all have an average daily transaction volume of $400 million, indicating a significant gap.
Performance and application of platform token $Solo
The platform token $Solo has performed very strongly over the past month, increasing by 120% in a single month. However, according to the functions and documentation description within the Sologenic platform, the platform token can currently only be used to pay related fees within the platform and enhance the returns of liquidity pools. Therefore, the author speculates that this surge is likely related to the strength of $XRP.
Disadvantages of the Sologenic platform
Although Sologenic currently ranks first among ecological DEXs, it still has the following disadvantages compared to top DEXs on other chains:
Interface not user-friendly: Switching transaction pairs requires adding options in a new way before switching, rather than directly changing transaction pairs, making it less intuitive to use.
Poor liquidity: Taking the XRP token as an example, if you want to trade XRP/USDC through the Trade function, you will find that the order book has a low number of orders. Even using the Swap function, you still have to bear some slippage and fees.
Low recognition of cryptocurrencies: Although Sologenic has provided a large number of cryptocurrencies in the XRP ecosystem for investors to trade, the lack of investor attention to the related ecosystem has resulted in many tokens being neglected with low trading volumes.
Difficult to estimate returns from liquidity pools: The platform only displays transaction fees, transaction volumes, and total participating funds without estimating the current annualized returns, making it hard to gauge how much reward will be earned in the future.
Emerging player DeXRP
As a DEX that has been highly discussed in XRPL recently, DeXRP hopes to attract investors with innovative and convenient features. The platform combines automated market makers and order book mechanisms to distinguish users who want to complete trades immediately from those who wish to precisely control buying and selling prices, providing a smooth trading experience through XRPL's high efficiency.
Overview of DeXRP functions
In addition to controlling trading costs using the aforementioned automated market maker combined with order book mechanism, DeXRP offers multiple convenient features for users:
Update on liquidity pools: No longer just a simple construction of liquidity pools to passively collect fee income, the platform returns many settings to liquidity providers so they can deposit into liquidity pools based on demand.
Market Dashboard: The platform integrates on-chain data and compiles it into indicators for user reference. Users can decide their current operational strategies based on transaction volume indicators and liquidity pool health indicators to avoid potential risks.
Dynamic fees: To capture market share and enhance market competitiveness, DeXRP allows users to vote on platform fees, with voting activities involving $DXP holders, liquidity providers, and community members.
Innovation in DeXRP liquidity pools
DeXRP's liquidity pool differs from other platforms in that it introduces a lock-up mechanism. Users who lock their funds for longer will gain more revenue-sharing rights, which not only benefits steadfast holders but also effectively curtails malicious pool draining behaviors.
Such changes may allow holders of high-quality ecosystem tokens to gain more returns through liquidity pools if they believe in the long-term upward trend. However, it is still important to remind that newer and lower market cap tokens in the ecosystem may experience price crashes if locked up for too long.
Advantages and disadvantages of DeXRP built on XRPL
Since November 2024, XRP has risen from $0.5 to approximately $3.15, with an increase of up to 500%. This strong performance undoubtedly attracts much market attention to the token, but its biggest advantage is also its biggest disadvantage, which is the lack of development in the XRPL ecosystem.
Based on the current fundraising situation of DeXRP, becoming a key protocol on XRPL is not difficult. However, whether this momentum can be sustained on other blockchains still needs observation. For this, DeXRP also aggregates three advantages of XRPL:
Extremely low transaction fees: Utilizing the original low-cost advantage of XRPL combined with the dynamic fees set by DeXRP, it is expected to achieve an extremely low cost of $1 per 10,000 transactions, allowing both retail and professional investors to ignore costs when trading.
Native DEX: Unlike protocols that are compatible with mainstream EVMs, XRPL cannot directly migrate smart contracts to use on that blockchain. Therefore, DeXRP will be independently developed to reduce the risk of smart contract vulnerabilities.
Regulatory oversight: XRP has experienced multiple lawsuits with the U.S. Securities and Exchange Commission (SEC), most of which have resulted in favorable outcomes, giving XRP an advantage in regulatory oversight. If DApps are developed on this basis, they are expected to enjoy similar benefits.
However, DeXRP has not yet formally displayed the platform interface or provided a test version for users. All information sources are from the official white paper and documents, so whether it can ultimately meet expectations of being cheap and efficient remains to be seen.
Platform Token $DXP
$DXP is the platform token for DeXRP, with the main functions being the following four:
Fee discounts: Trading on the platform allows for fee reductions, similar to the function of $BNB on Binance.
Liquidity Pool Incentives: Increase the returns from liquidity pools, similar to the function of $PENDLE in Pendle Finance.
Pre-sale priority subscription: If the platform conducts a Launchpad in the future, priority subscription will be available.
Fee decision-making rights: Token holders collectively decide the platform fees to ensure the future direction of the platform.
$DXP has a total supply of 2 billion tokens, with the following distribution:
Allocation Percentage Allocation Number TGE Unlock Percentage Public Sale 25% 500,000,000 2.5% Liquidity Pool Rewards 15% 300,000,000 7.5% Staking Rewards 10% 200,000,000 ❌ Ecosystem and Partners 10% 200,000,000 ❌ Team, Marketing, and Treasury 31% 620,000,000 ❌ Airdrop Activities 3% 60,000,000 ❌ R&D Fund 6% 120,000,000 ❌
$DXP pre-sale activity
The platform token is currently undergoing an IDO, with DeXRP adopting a Staged Presale method for sale. The current pre-purchase price is 0.03921 USDT (85th stage), which has risen nearly five times from the initial subscription price of about $0.008, while the official announced token listing price is $0.35.
The platform has currently raised nearly $3 million, and according to the official receiving addresses, over 100,000 addresses have participated. Coupled with recent promotions on social media X, the author believes that the subscription amount may continue to rise.
$DXP market cap estimation
Although the official website shows that the final listing price of $DXP will be $0.35, nearly nine times the current subscription cost, can it maintain this price? The author will estimate the possibilities based on the circulating market cap and total diluted market cap at the time of TGE.
Market cap at the time of TGE: 10% of total supply * $0.35 = $70 million
Total diluted market cap: total supply * $0.35 = $700 million
When compared to top DEXs in the crypto space, neither the market cap at the time of TGE nor the total diluted market cap can be considered overvalued. However, since DeXRP is still in the development stage, it remains to be seen whether XRP can develop an excellent DeFi platform before drawing conclusions.
Conclusion
XRP, with a single token boasting a market value of $190 billion, has yet to give birth to an excellent DeFi platform within the XRPL ecosystem. Even though the Sologenic DEX is available for users to trade, it still falls short in functionality and ease of use for newcomers to easily join.
The rise of DeXRP will inevitably impact the XRPL ecosystem. If the XRPL ecosystem flourishes in the future, DeXRP may become a dark horse. However, before that, caution should be exercised regarding the platform's pre-sale activities to avoid investing in a platform that cannot launch as scheduled.
This report is for informational sharing only and does not constitute any form of investment advice or decision-making basis. The data, analysis, and opinions quoted in the text are based on the author's research and public sources and may contain uncertainties or change at any time. Readers should make prudent investment judgments based on their own circumstances and risk tolerance. For further guidance, it is recommended to seek professional advice.
