Why XRP May Struggle to Overtake Ethereum as the No. 2 Crypto

In the evolving cryptocurrency landscape of 2025, the race for the No. 2 spot behind Bitcoin remains a fiercely contested arena. While XRP has surged in institutional adoption and regulatory clarity, Ethereum's entrenched ecosystem and technological adaptability continue to anchor its dominance. This analysis examines why XRP may struggle to displace Ethereum, focusing on network utility, institutional adoption, and regulatory headwinds.

Network Utility: Efficiency vs. Versatility

XRP's technological foundation is optimized for speed and cost-efficiency, with the XRP Ledger processing up to 1,500 transactions per second (TPS) and achieving finality in 3–5 seconds, according to SNCOIN. This makes it a compelling solution for cross-border payments, where Ripple's On-Demand Liquidity (ODL) service has processed $1.3 trillion in transactions in Q2 2025, according to The Coin Republic. However, Ethereum's broader utility in decentralized finance (DeFi), non-fungible tokens (NFTs), and smart contracts creates a more diverse value proposition. Ethereum's transition to proof-of-stake (PoS) in 2022 has enhanced its energy efficiency and scalability, with Ethereum 2.0 upgrades projected to boost TPS to 10,000+ in the coming years, as reported by Cointelegraph. While XRP excels in niche use cases, Ethereum's programmable infrastructure supports a wider array of applications, from decentralized lending platforms to tokenized real-world assets.

Institutional Adoption: Niche Appeal vs. Ecosystem Depth

XRP has seen a surge in institutional interest, particularly in cross-border payments. Over 60 institutions integrated XRP in late August 2025, including JPMorgan and SBI Holdings, according to Private CharterX. Ripple's ODL platform has also attracted $542 million in futures trading volume on CME Group, signaling growing acceptance as a liquidity tool, Finance Guru Insights noted. However, Ethereum's institutional adoption is more diversified. The approval of spot Ethereum ETFs in 2024 drew billions in capital, with corporate treasuries now holding an estimated 4.1 million ETH as a reserve asset, CoinDesk reported. Ethereum's programmable finance ecosystem-hosting thousands of decentralized applications (dApps) and smart contracts-provides institutions with tools for everything from tokenized bonds to automated governance models. This depth of utility makes Ethereum a more attractive long-term investment for institutions seeking exposure to Web3 infrastructure.

Regulatory Headwinds: Uncertainty vs. Adaptability

The SEC's prolonged legal battle with Ripple has cast a shadow over XRP's future. While recent court rulings have clarified that secondary market sales of XRP do not constitute securities transactions, CryptoTil reported, the agency's inconsistent approach to token classification remains a risk. In contrast, Ethereum's transition to PoS has aligned it with global regulatory trends favoring energy-efficient consensus mechanisms. Internal SEC communications, revealed through Coinbase documents, also highlight uncertainty about Ethereum's classification under the Howey Test, XRP Right Now noted. A favorable ruling for Ripple could unlock XRP ETF approvals and relistings on U.S. exchanges, but the prolonged litigation has created a regulatory limbo that deters risk-averse investors. Ethereum's adaptability-both technically and in regulatory dialogue-positions it as a safer bet for institutions navigating evolving compliance frameworks.

Conclusion: Complementary Roles in a Fragmented Market

While XRP's efficiency in cross-border payments and recent institutional inflows suggest strong growth potential, Ethereum's versatility and ecosystem depth remain unmatched. The No. 2 crypto title is less about direct competition and more about complementary use cases: XRP as a bridge for global liquidity and Ethereum as the backbone of programmable finance. For investors, the choice between the two hinges on priorities-whether prioritizing payment infrastructure or decentralized innovation. As regulatory clarity emerges, both assets are likely to coexist in a multi-chain future, with Ethereum retaining its crown for the foreseeable future.