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Investing.com – It’s not good at all for Ripple if investigative journalist John Hyatt’s research turns out to be accurate. Hyatt published an article on Ripple Labs’ business practices on Forbes, stating that the core business of cross-border payments is clearly not as thriving as claimed.
Additionally, the fintech claims to have a lucrative software development business, which Hyatt claims is also not the case.
During its research, Hyatt came into contact with several Ripple collaborators. They indicated that On Demand Liquidity (ODL) is the technology that generates the most turnover. Software like RippleNet should even probably be a loss-making business. The only thing that makes the whole thing “massively profitable” is the sale of XRP.
In ODL technology, XRP is used as a sort of gateway currency between two currencies in cross-border payment traffic. For this, the ODL partner must borrow XRP from Ripple-Labs, which in turn sells them within its payment network.
The years 2021/2022 were the most successful for Ripple so far, as sales of XRP attributed to ODL generated profits of $2.7 billion. This gives the impression that the demand for ODL is constantly increasing.
Hyatt’s research, however, raises well-founded doubts about this.
Ripple’s expansion strategy also includes taking stakes in payment service providers to better integrate its own products. This is what happened with the Malaysian payment service provider Tranglo in March 2021: Ripple acquired 40% of this well-established company in Asia and started implementing ODL.
While Ripple CEO Brad Garlinghouse spoke in a CNBC interview earlier this year about an increase in the number of customers and the number of transactions, Tranglo’s numbers paint a whole different picture, as discovered Hyatt.
According to this data, only 8% of Tranglo customers use ODL technology, despite the fact that it is advertised as being much faster and less expensive. Added to this is the fact that the majority of these transactions are carried out by a subsidiary.
It doesn’t really look like wide adoption and organic growth. The agreement between Ripple and Tranglo states that regardless of Tranglo’s demand for XRP, Ripple can sell XRP in unlimited quantities to affiliate partners through this ODL channel.
At the heart of the matter, it does not seem at all to be about revolutionizing payment traffic using ODL and XRP as a means to an end, but rather about establishing ODL as a selling point for XRP.
Of course, you only get new customers if you promote the image of a highly demanded business sector. In its article, Hyatt quotes Martin Walker, Director of Banking and Finance at the Center for Evidence-Based Management, as follows:
“Ripple continues to go to great lengths to spread the story that it is improving cross-border transfers and payments. But whenever information about the reality emerges, it is exclusively about the sale of XRP.”
Hyatt asked Ripple Labs and Tranglo to speak before publication. While Tranglo did not respond, a spokesperson for Ripple Labs spoke of “inaccurate” numbers and claimed that Tranglo did not present the full picture. However, he would not say what it looked like.
XRP technical benchmarks
With a price of $0.4945, Ripple is currently recording a daily gain of 1.23 percent, while the weekly loss stands at -3.44 percent.
The cryptocurrency ended yesterday at the support level of the 38.2 percent Fibo retracement at $0.4925. Today’s closing price below the psychological threshold of $0.5000 signals that further losses are imminent in the event of a confirmation of the loss of this threshold.
The door would then be open for an extension of the downside move towards the 50 percent Fibo retracement of $0.4649. Below that is the 61.8% Fibo retracement at $0.4373.
A test of the March 29 high at $0.5820 should only be expected if the daily closing price breaks above the 23.6 percent Fibo retracement of $0.5267.
By Marco Oehrl