Why ETH Might Be the Smarter Play Than XRP Right Now

The Setup

XRP has been on an absolute tear—up 340% since the Nov 2024 elections, putting ETH’s gains to shame. But here’s the thing: momentum isn’t a long-term investment thesis.

The real question? Which token actually creates value as adoption grows. And when you dig into the mechanics, the answer gets interesting.

XRP’s Problem: It Might Become Obsolete

Ripple’s pitch is solid on the surface—banks need faster, cheaper settlements. XRP was built to solve this. And yes, major financial institutions use Ripple’s tech.

But here’s the catch: they don’t actually need XRP tokens to do it. Banks can use RippleNet without touching the volatile crypto. They get the efficiency gains without the risk.

Ripple’s On-Demand Liquidity (ODL) does use XRP as a bridge asset for cross-border payments, which sounds bullish. Except… most major banks don’t have liquidity problems severe enough to justify XRP’s volatility. And now Ripple acquired Rail (a stablecoin platform) and launched RLUSD.

The uncomfortable truth? Ripple’s own stablecoin could replace XRP in ODL transactions. The company is essentially building a better product that marginalizes its own token.

Why ETH Is Different

Ethereum’s value proposition flips this entirely. Stablecoins (USDC, USDT, DAI) live on Ethereum. Every single transaction on the network requires gas fees paid in ETH.

This creates a double squeeze:

1. Demand pressure: You need to acquire ETH to pay fees
2. Supply pressure: Each transaction burns a portion of ETH forever

Yes, Layer-2 solutions reduce fees, and new ETH enters via validator rewards. But the math still works—ETH burns enough per transaction to actually matter, unlike XRP’s negligible burn rate.

Moreover, if stablecoins explode into a multi-trillion-dollar market (as Citi predicts), ETH benefits automatically. XRP might not.

The Bottom Line

XRP’s economic model has a fundamental flaw: its own blockchain is building products that could render the token unnecessary. Meanwhile, ETH’s value is structurally tied to network activity in a way that creates genuine scarcity.

Short-term momentum? XRP wins. Long-term value creation? Different story.