Lack of XRP liquidity slows down adoption of ODL

• According to Ripple CEO Brad Garlinghouse, the adoption of On-Demand Liquidity is currently slowing down because there is not enough liquidity available yet.
  
• In the last quarter, XRP based ODL transactions accounted for almost a fifth of RippleNet’s transactions.

In a recent interview by Modern Consensus with Ripple‘s CEO, Brad Garlinghouse provided interesting insights into the company’s business activities, especially with regard to XRP and the cross-border payment solution On-Demand Liquidity based on it. Garlinghouse explained that the demand for On-Demand Liquidity is currently too large for Ripple to meet all requests.

The CEO of Ripple justified this by arguing that ODL relies on crypto exchanges to accept Fiat currencies and settle XRP across borders. In principle, ODL offers a transfer in seconds to avoid the general problem of price volatility of cryptocurrencies. However, this is only guaranteed if there is sufficient liquidity in ODL’s system and the specific payment corridor with the help of partner exchanges to buy and sell XRP within seconds.

In this sense, Garlinghouse stated that Ripple had to slow down the adoption of ODL because there is currently not enough liquidity to meet demand:

[Ripple has] actually throttled that growth because one of the things that’s important when using ODL is you have to have really good liquidity on both sides of the transaction. And so, if XRP doesn’t have enough liquidity in the marketplace and you can’t put as much demand through.

According to Asheesh Birla, Senior Vice President of Product at Ripple, Ripple and its ODL technology is still making great strides. “Ripple continues to expand globally, bring on new customers to RippleNet, specifically ODL, and see an increase in RippleNet transactions,” Birla explained in the interview. Since the introduction of RippleNet, transactions worth more than $2 billion have been completed, with ODL accounting for nearly one-fifth of RippleNet transactions in the last quarter.

With regard to the XRP price, Garlinghouse stressed that it has a long-term perspective. Ultimately, according to Ripple’s CEO, increasing liquidity will determine customer usage and thus have a positive impact on the price:

I do not spend a lot of time and energy focused on the ups and downs. I don’t think about the price on a short-term basis. I have said publicly before, I think about it over many years, not over many days or even weeks, as long as we have the liquidity in the marketplace to be able to deliver on the products we are building for our customers.

Modern Consensus also addressed the currently pending class action lawsuits against Ripple Labs and their threat to ODL. If the lawsuit is lost, Ripple could be forced to discontinue the sale of XRP. Stuart Alderoty of the General Counsel of Ripple Labs commented on this and blamed the legal vacuum in the US for the lawsuits.

However, Garlinghouse was optimistic about a positive outcome for Ripple, and referred to the letter from the US Consumer Financial Protection Bureau and the green list from the New York State Department of Financial Services, which recently approved corporate custody of XRP.