XRP vs ETH: Which Crypto Actually Has Better Economics?

The Setup

XRP’s been on an absolute tear—up 340% since the Nov 2024 elections. ETH? Only 22x less impressive (sarcasm). But here’s the thing: past pumps don’t predict future gains. What actually matters is the economics underneath.

Let’s dig into what makes these two tick differently.

Why XRP’s Thesis Has a Crack

Ripple solved a real problem: international payments are slow, expensive, and involve way too many middlemen. The idea? XRP becomes the bridge asset, demand grows, token moons.

Sounds clean. Except it’s not.

Here’s the problem: banks don’t actually need XRP to use Ripple’s network. RippleNet works fine without touching the token. Most major banks do exactly that—they get the efficiency gains while dodging crypto volatility entirely.

Ripple’s On-Demand Liquidity (ODL) does involve XRP as a bridge. It solves real liquidity problems for institutions. But—and this is crucial—most major banks don’t have liquidity constraints bad enough to justify holding a volatile crypto, even temporarily.

And here’s the kicker: Ripple just bought Rail, a stablecoin platform. They’re building RLUSD to be the primary bridge asset instead. Think about what that means. XRP’s use case could literally get replaced by Ripple’s own stablecoin.

Why ETH Wins From Stablecoins

Ethereum’s position is inverted. If stablecoins explode (and Citi says they could hit trillions), ETH actually gets stronger.

Why? Because almost every major stablecoin—USDC, USDT, DAI—runs on Ethereum. Every transaction needs “gas” fees paid in Ether.

Demand pressure: More stablecoin volume = more ETH needed for gas fees.

Supply pressure: A chunk of each gas fee gets burned forever.

It’s a simple loop: adoption → demand + scarcity → better economics.

Now, Layer-2s complicate this by reducing gas costs. But the core mechanism still holds.

XRP has a burn mechanism too, but here’s where scale matters: XRP burns pennies per transaction. It barely moves the supply needle. ETH burns enough per transaction to actually count.

The Real Difference

Both tokens have use cases. But their economic models respond completely differently to industry growth.

XRP’s value thesis depends on banks choosing XRP specifically. They don’t have to. They probably won’t—at least not at the scale needed to justify current prices.

ETH’s thesis is simpler: more stablecoin activity = more gas demand. That’s baked into the protocol itself. No middleman, no choice.

For long-term investors? ETH’s economics are just cleaner. Not perfect—validator rewards introduce new supply—but better positioned for the stablecoin wave everyone’s betting on.

The Takeaway

XRP got the pump. ETH’s got the mechanics. One’s a narrative play; the other’s got real tokenomics underneath it.