XRP is under scrutiny after one expert called it the “biggest financial scam” on the basis of low decentralized exchange (DEX) trading volume. Analyst Aylo sounded the alarm after recording just $44,000 DEX volume in 24 hours. The comment sparked a wider discussion on market manipulation for price stability in XRP. Ripple’s Chief Technology Officer, David Schwartz, fired back, saying that these statistics are not reflective of the overall utility of XRP.
XRP Low DEX Volume Sparks Fears
Aylo’s argument is that the XRP Ledger (XRPL) has a low DEX volume but has a market capitalization of $140 billion. At $44,000 quoted in DEX volume, this stands in stark comparison to alternatives such as Ethereum with billions of volume traded.
Based on DeFiLlama statistics, TVL on XRPL is around $80.63 million. That’s less activity than other DeFi networks that have mature ecosystems.
Schwartz replied back to Aylo, taking a guess that the data is comprised primarily of Automated Market Makers (AMMs), a mere fraction of what humans utilize XRP for. He said, “I bet that’s just looking at AMMs on XRPL, a miniscule fraction of what people use XRP for.”
Insights on Market Manipulation
Market manipulation issues have also been voiced as issues surrounding XRP price movements. Notable software designer Vincent Van Code contends that XRP is susceptible to price manipulation due to low volumes. He noted in recent observations that more than 500 small orders were placed below six XRP, which is reflective of artificial price manipulation during thin volume times.
Van Code, denounced high-frequency trading actions taking advantage of market inefficiencies. He noted exchanges such as Binance created markets that are favourable to market manipulation, with disproportionate gains accruing to VIP customers.
The Ripple Response and Broader Market Context
In response to such criticisms, Ripple has proposed three options to make the regulations of crypto clear in its recent update to the SEC. The firm is keen on creating a better trading environment and is confident that it will earn trust and transparency for its business.
There are still bullish sentiments towards XRP despite negative sentiments. There are experts who assert that the current low trading volumes are potential investment opportunities. For example, Vet, a dUNL validator, says the actual 24-hour DEX volume for XRPL is approximately $9 million, much less than Aylo’s estimates.
According to him, the reduced volume proves unrealized potential in the XRPL DeFi ecosystem, which is expanding. While Ripple finds its way through such complexities, its community is anticipating how the game will play out.
