XRP Upgrade Could Make Holding XRP Optional-Why That Threatens the Token Even as XRPL Grows

Sponsored Fees and Reserves could strengthen XRPL adoption while reducing forced XRP ownership

The core valuation conflict is straightforward: XRPL can become more useful while XRP becomes less essential to access it. Today, a new user must 1 XRP per account, lock 0.2 XRP per owned item, and pay a small fee in XRP. That creates a basic demand choke point because people need XRP before they can use the network. The proposed Sponsored Fees and Reserves upgrade changes who bears that cost A bank, issuer, or platform can cover both the fee and the locked amount.

Why the payer matters more than raw activity

Sponsored Fees would let sponsors cover transaction costs and reserve requirements for end users while users keep control of their own accounts and keys. That should help adoption, but it also reduces the need for everyday users to acquire XRP up front.

The more immediate effect may be a shift in where XRP is held rather than a clean rise in net demand. Under sponsorship, locked XRP would move from many small users to fewer platforms. That does not automatically reduce XRP's utility; it may simply change who holds it. Still, if onboarding becomes easier without requiring users to buy XRP themselves, XRPL growth may not translate into XRP demand in the way bulls expect.

XRPL can support more financial activity without XRP becoming the settlement asset

The bullish case is still real, but it depends on one condition: the new features must make XRP the asset that settles, collateralizes, and flows through trades. The timing matters. A major upgrade package is expected to enter validator voting in roughly two weeks, and the native AMM could get three swappable curve types. Better curve options could improve liquidity efficiency and make on-chain trading more usable.

But usage and token demand are not the same thing. XRPL already has traits of a usable financial backend: tokenized funds can sit on the ledger, stablecoins can move across it, and recent releases have improved core DeFi functionality XRPL 3.1.3. That supports network activity, yet it is not proof that XRP will become the liquidity backbone. If stablecoins and tokenized assets do most of the transferring and pricing, XRPL can grow while XRP remains a secondary settlement layer.

What current demand signals still suggest

On-chain metrics also show why the debate remains open. The realized profit-to-loss ratio at 0.38 suggests losses have outweighed profits, and about 41.5% of XRP's circulating supply is held at a loss. That kind of positioning can weigh on rallies. It also fits the bearish argument that XRPL adoption is happening around XRP rather than through XRP.

The bullish counter is that the market may still be early. regulatory clarity, ETF demand, and a growing DeFi ecosystem could still change the demand mix over time. That leaves the more constructive view dependent on a specific shift: activity has to move beyond token transfers and start requiring XRP as a common collateral and settlement medium.

What matters next: validator votes, sponsorship design, and whether XRP becomes essential

The next catalyst is procedural, not sentimental. Investors should watch for the moment the amendment package enters validator voting in roughly two weeks. If the package stalls, XRP remains a waiting game. If it advances, adoption may improve even if XRP demand still takes longer to materialize.

Three signposts to watch

• Whether sponsorship reduces forced ownership. If end users no longer need XRP to open accounts or interact with the ledger, the first-order effect may be easier onboarding rather than stronger token demand.
• Whether new DeFi features increase XRP usage. Better AMM curves only help the token if they drive more pooling, pricing, and collateralization in XRP rather than mainly in stablecoins.
• Whether ledger growth shows up in token demand. If activity keeps concentrating in stablecoin transfers and token issuance without XRP pairs or settlement roles, the gap between XRPL success and XRP demand may persist.