One of these assets has a pathway to growth, and the other is a trap.
Both XRP (XRP -2.28%) and World Liberty Financial (WLFI) are popular cryptocurrencies at the moment, but only one has the platform and proven track record of success to justify buying and holding it forever.
So without further ado, let’s analyze each of these coins and determine which is the better buy for those with a long-term investing mindset.
There are many different factors that make up the investment theses for these two assets. But it’s actually a supply and tokenomics issue that differentiates one of them as being investment grade and the other as being uninvestable.
First, it’s important to understand that the World Liberty Financial token is not to be confused with its issuer, World Liberty Financial, which is a crypto asset management business that’s owned and operated by the Trump family and some of their allies. As of early September, that company’s revenue is primarily generated from fees relating to its stablecoin, USD1, (USD1 -0.00%) and various dealmaking activities.
The World Liberty Financial token has a total supply of 100 billion, with 33.5% of that sum allocated to its co-founders, 20% allocated for past or future token sales to the public, and the rest allocated to internal funding purposes or to other insiders, including businesses. The token’s stated utility is governance of the crypto project bearing the same name, so in theory it offers voting rights.
But the token does not entitle holders to any revenue sharing, dividends, airdrops, or any other distributions, and there is a 5% cap on any single wallet’s voting power. Given that the small proportion of the supply that’s available to outsiders is dramatically smaller than what the founding team already holds, the voting rights associated with the token are effectively worthless; the supermajority of votes on any given governance issue is structurally guaranteed to be insiders. The owners could even vote to create more tokens for themselves if they chose to.
Therefore, in practice, the token is a meme coin, as it has no fundamental value and can only increase in price as a result of bullish sentiment and hype.
Furthermore, investors’ holdings are contestable if insiders desire it. In early September, a prominent early backer said his World Liberty Financial tokens worth $107 million were frozen, underscoring that protocol administrators can and do restrict transfers when it suits them.
Now, contrast that with XRP.
XRP has a fixed maximum supply of 100 billion XRP. It’s true that owning XRP does not entitle you to governance rights, but that’s beside the point because it’s a coin targeted at financial institutions to use as a cost-saving tool rather than being used as a governance token. Ripple, the company that issues XRP, locked 55 billion XRP into escrow to provide supply predictability; the XRP ledger (XRPL) releases these time-based escrows monthly.
Historically, Ripple has released 1 billion XRP per month and relocked most of it. For example, in the first quarter of 2023, XRP unlocked 3 billion coins and 2.1 billion were returned to escrow, implying a net release near 300 million XRP per month. But on top of that, the protocol has a mechanism by which the supply gets consistently reduced through burning coins with each transaction on the chain. So, as XRP is adopted more and more by financial institutions and institutional investors seeking to cut their money transfer costs and make their asset management workflows more efficient, the coin will both be in higher demand, raising its price, and also in somewhat shorter supply, even considering the modest supply unlocks from escrow.
And that’s before even getting into the XRPL’s use as a payment processing venue for stablecoins or its use as a platform for managing tokenized real-world assets (RWAs). Other factors, like its new Ethereum-compatible smart contract capabilities, serve to differentiate it even more. Because World Liberty Financial isn’t itself a blockchain like the XRPL, its odds of competing in these segments are zero.
The differences here should be very obvious to most investors. World Liberty Financial’s rigged supply dynamics and opaque transfer rules concentrate power for insiders and leave holders in the cold. XRP’s supply discipline is embedded at the ledger level.
Long-term investors should know about the economic engine they’re thinking of buying.
World Liberty Financial may one day have a growth engine due to its stablecoin becoming widely distributed or from other efforts. Today, holders of the token have no exposure to that growth by design.
On the other hand, doing anything on the XRPL blockchain requires buying and holding XRP. Ripple has consistently created new features to attract capital to the chain, which is equivalent to creating new reasons for its target users to buy and hold XRP and to park their stablecoin value on its chain. That generates demand for the coin or burns its supply, putting upward pressure on the price.
The financial sector is only now starting to switch over to using blockchains at large scale. So XRP almost certainly has plenty of room to grow for years and years. And, when paired with all of the other factors we’ve discussed, it’s clear that it’s the better coin to buy and hold by far.
