- Mark Phillips, a US Air Force veteran, suggests an XRP ETF could function as an ODL pool, increasing its value through both asset appreciation and ODL use.
- Panos Mekras, founder of DigitalGen, counters that an XRP ETF would conflict with the decentralized nature of ODL, making it an impractical solution.
The ODL-ETF Conundrum: A New Frontier or a False Hope?
In a space as dynamic as cryptocurrency, the notion of an XRP Exchange-Traded Fund (ETF) serving as a component of Ripple‘s On-Demand Liquidity (ODL) has sparked considerable discourse. Mark Phillips, an XRP aficionado and US Air Force veteran, recently posited that such an ETF could function as a pool within Ripple’s ODL system. The crux of his argument hinges on a dual value proposition: the value of the XRP ETF would ostensibly swell not only due to the appreciation of the underlying asset but also from its utilization in facilitating ODL transactions.
Could an $XRP ETF be used as an ODL pool?
If so, value would increase both with asset price appreciation AND with ODL utilization.
This could make an $XRP ETF more attractive than most other investment vehicles.
— Mark Phillips {XRP} (@Mark_Phillips) September 3, 2023
Analyzing Dual Value Mechanisms
Phillips’ theory postulates that an XRP ETF could materially enhance cross-border payments in the ODL pool, attributing value increments to two distinct dynamics. Firstly, the ETF would capture value from the innate appreciation of XRP as a digital asset. Secondly, an influx of demand for XRP stemming from increased ODL transactions would serve as an additional value catalyst. By this line of thinking, an XRP ETF could emerge as an investment vehicle superior to its counterparts.
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Challenging the ETF’s Role in ODL
However, this innovative notion met with skepticism from Panos Mekras, founder of DigitalGen and author of Understanding the Crypto Economy. According to Mekras, the very fabric of ODL is woven with decentralization and neutrality—attributes not encapsulated by an ETF. Mekras further emphasized that XRP held in an ETF is fundamentally
“locked and reserved,”
rendering it unsuitable for immediate operational deployment within an ODL pool.
Mekras also delineated the primary role of ODL as a facilitator for converting XRP into fiat currencies globally. In his view, an ETF structure diverges from this core functionality, given that ODL’s essence revolves around real-time, decentralized exchanges between XRP and various fiat currencies.
Regulatory and Market Implications
Significantly, the subject of an XRP ETF is accentuated by XRP’s unique standing as an altcoin with regulatory clarity in the United States. Community members argue that this positions XRP more favorably for ETF approval compared to other cryptocurrencies like Ethereum (ETH). Additionally, Bloomberg analyst James Seyffart weighed in on the regulatory hurdles, suggesting that listing XRP on the Chicago Mercantile Exchange (CME) could be a prerequisite for SEC approval of an XRP Spot ETF.
As the industry grapples with these diverging viewpoints, the role of an XRP ETF in Ripple’s ODL remains a tantalizing yet unresolved question.
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