XRP Surges All the Way: Why Zero VC, No Smart Contract, Low User Volume, but Achieved a Market Cap of $180 Billion?

Author: goodalexander

Compiled by DeepTide TechFlow

Why does XRP make people's "brains short-circuit"?

In the field of Crypto Assets, the existence of XRP has subverted many traditional narratives, especially the mainstream views on venture capital (VC) and protocol value.

The initial view was that "venture capital always tends to dumping, so choosing Meme coin is a strategy to fight against venture capital." However, this view is gradually being overturned. It turns out that what can really resist venture capital is not Meme coin, but those protocols with stable cash flow, as well as long-term protocols based on the US (often referred to as "dinosaur coin" or Dino coins).

First of all, Hyperliquid demonstrates how cash flow-driven startups can achieve success through community distribution. Jeff initially supported this project with his own trading funds, proving that it is possible to establish a community-oriented distribution model without relying on venture capital support.

Secondly, XRP further demonstrates the reliability of CryptocurrencyWhale's follow protocol, and this reliability is closely related to the existence time of protocol. The case of XRP challenges the core assumptions of venture capital, especially the following points are unacceptable to venture capital:

No Venture Capital Openness: XRP has almost no investment from venture capital, so venture capital cannot profit from it.

Lack of Smart Contract technology: XRP does not rely on Smart Contracts, which runs counter to the technological logic of most venture capital investments.

Contradiction between user base and value: XRP has only 20,000 active sending Wallets, but has a market capitalization of up to 180 billion US dollars, which is completely opposite to the traditional view that "protocol value requires a large number of user support".

Focused on transaction sending: XRP's core functionality is to send transactions, and the efficiency of this single function outshines other multi-functional protocols.

The 'God Candle' event of XRP/SOL and the warning of regulation

The 'miracle candle' event of XRP/SOL (i.e., the sudden big pump in price) occurred during the Pump.fun live broadcast, at the same time as incidents of human exploitation, human trafficking, and attempted suicide. These events have led people to start reflecting: when a protocol has a large number of users but lacks review mechanisms, it may lead to extremely negative consequences, including the proliferation of illegal activities and the exacerbation of social issues. This situation ultimately attracts follow-up from regulatory agencies or law enforcement authorities.

This brings us to another controversial feature of XRP: Trust Lines. The trust line requires users to actively establish a trust relationship before accepting a certain token. This means that users cannot send "racist tokens" or other undesirable tokens to arbitrary addresses at will. While this design has been criticized as a "high-friction" user experience (UX), it effectively discourages low-quality usage while satisfying the needs of high-quality users, such as banks. This mechanism is becoming more and more accepted as the market becomes aware of the problems that can arise without these safeguards.

BTC (BTC) has almost no applications in such scenarios, but its performance still far exceeds that of Ethereum (ETH), even though the latter claims to "drive Web3". This is the initial stage of market changes, but the live event of SOL really makes people understand what "large-scale adoption other than buying" looks like, and realize the importance of Compliance.

Another important change is that the radical enforcement system has effectively ended since Trump was elected. This has transformed the US-based protocol from being at risk of survival to being protected by the 'Navy'. Any attempts to scrutinize Ripple Labs' actions may face strong resistance from the US government.

XRP's biggest risk was once the possibility of the U.S. government accusing its sole Node list (UNL) of being involved in fund transfers and imposing OFAC fines, while also compelling each validators to comply through SEC lawsuits. However, with the changing regulatory environment, these risks are gradually transforming into advantages for XRP.

Protocols with similar risks, such as Cardano and XLM, have also taken more proactive actions as a result. Nowadays, the regulatory environment in the United States sees them as important tools to counter censorship.

In addition, the special status of the United States in the global financial system has also influenced this trend. The United States is one of the centers of global anonymous cash, as it is difficult for other countries to enforce reporting requirements on US Financial Institutions. Tether can be seen as an on-chain extension of this logic - a semi-compliant cash reserve pool with a scale of up to $135 billion. As long as these assets are denominated in US dollars, the US government will not be concerned about reporting requirements from other countries. This is also the reason behind Tether's closure of operations in Europe.

The United States wants to strengthen the global dominance of the dollar through financial innovation in the field of cryptocurrency. XRP's R&D activities have thus shifted from being "marginalized" to being part of U.S. government policy.

Although the recent price fluctuation of XRP has been attributed by some to the actions of retail investors, the reality is that, especially for long-established currencies, the holdings are highly concentrated. Most whales in the network are not dumping at the current price, even though market liquidity allows them to do so. This indicates that they still have confidence in the future of XRP, and this confidence comes from the multiple factors mentioned above.

The logic of the market is never wrong, our task is to understand it as much as possible, and learn from it.