- Phil Kwok, a guest lecturer at Cambridge University, has unveiled a new three-step framework for assessing blockchain networks, which posits that XRP is on its way to a new high.
- XRP has been one of the biggest gainers since the turn of the year, and analysts say Donald Trump’s inauguration could kickstart the biggest bull rally yet.
Phil Kwok, co-founder of the Web3 learning platform EasyA, recently sparked a discussion on X after he proposed a framework that showcases the immense potential of XRP.
The Three-Step Process That Showcases XRP’s Potential
In the first step, Kwok emphasized the importance of understanding the supply of XRP. He points out inflation and the token launch as the two sources of supply. When the XRP Ledger was launched, a fixed supply of 100 billion tokens was created. XRP cannot create additional tokens, making it deflationary.
supply usually comes from 2 sources:
1. when the token is launched
2. inflationwe wanna watch out for inflation.
because it means more tokens coming onto the market each year.
and that means selling pressure…
— Phil Kwok | EasyA (@kwok_phil) January 19, 2025
However, Kwok highlighted that Ripple was allocated 80 billion XRP, with the majority of these tokens still in its control. Most of these tokens are held in escrow accounts and released monthly to the market. This supply management affects the market dynamics, creating additional selling pressure.
Additionally, Kwok argued that demand, the second step in the framework, is where the token’s value shines. He noted that unlike meme coins such as DOGE, the demand for utility tokens like XRP does not rely solely on speculative buying.
XRP’s demand originates from its utility within the XRP Ledger in areas such as transaction fees. Further, the circulating supply is reduced through the burning of these fees.
Kwok further explained how XRP serves as a bridge currency for cross-border payments. This use case facilitates transactions between currencies, such as Japanese Yen to Euros, using XRP as a bridge currency. Kwok highlights that Ripple payments reduce the transaction time from days to seconds and the fees from double-digit percentages to negligible transaction costs. The services are also available during weekends and holidays, strengthening its utility-driven demand.
remember that the #xrp ledger’s built for payments.
cross-border payments.
so xrp’s also used as a bridge currency.
let’s say we wanna convert between japanese yen and euros.
ripple payments will do that for us with xrp.
yen => xrp => euro.
this is a massive market. pic.twitter.com/K3RiuCKOeX
— Phil Kwok | EasyA (@kwok_phil) January 19, 2025
The third and final step is supply shocks, where the supply of tokens is suddenly restricted. This significantly influences prices. The XRP Ledger does not apply these mechanisms due to its pre-mined nature. Despite this, Kwok highlighted recent amendments and new features that could have similar effects. Market participants use the token in automated market makers (AMM) and earn returns as liquidity providers.
Kwok briefly analyzes other blockchains, such as Ethereum and Polkadot. He discusses Polkadots’s parachains which lock up supply for extended periods, reducing market availability, and demonstrates how this could impact prices.
The price of XRP may increase further if the new features of the XRPL cause comparable supply shocks, particularly if demand spikes with further institutional use. Kwok stressed that his three-step framework is not for predicting the token’s price but is experimental and designed for simplicity.
XRP trades at $3.3, gaining 2.4% in the past day to bring its cumulative gains since the turn of the year to 52%.
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