Arca CIO Criticizes XRP as 'Opposite of Good Token Design'

Jeff Dorman, CIO at Arca, recently suggested that XRP represents the “opposite of good token design” amid criticisms of the top crypto assets.

He argued that the gap between cryptocurrency adoption and market prices remains largely because four of the top five crypto assets by market cap remain weak investments.

Dorman criticized Bitcoin, Ethereum, Solana, and XRP, claiming their token economics do not show the real value created by blockchain technology. According to him, this situation has pushed the industry toward short-term trading instead of long-term fundamental investment.

• Jeff Dorman of Arca said the crypto industry struggles because four of the top five assets by market cap are difficult to justify as long-term investments.
• For XRP, Dorman claimed the token does nothing, lacks strong design, and has no linkage to Ripple despite the firm selling billions a year.
• Dorman also questioned Bitcoin, highlighting concerns about quantum risks and the rise of stablecoins for payments.
• He said Ethereum and Solana face high token inflation and would need roughly 1,000 times more activity to justify current valuations.
• Dorman believes the strongest growth in crypto will come from stablecoin payments, DeFi, and real-world asset tokenization, areas where firms like BlackRock and Securitize are already active.

Dorman made these comments in a recent X post. According to him, the industry grew around a few large tokens that do not capture the value created by blockchain technology. As a result, much of the market attracts short-term traders instead of long-term investors who usually focus on fundamentals.

He believes this situation explains why exchanges and brokers often focus on fast-moving traders and macro funds like CTAs, rather than the larger group of investors who dominate traditional financial markets.

The Arca executive believes prices may continue moving out of step with actual adoption if the crypto market does not start pushing toward assets that truly benefit from blockchain growth. However, he failed to highlight multiple examples of such assets.

Notably, Dorman directed some of his strongest criticism toward XRP. He argued that the token represents “the opposite of good token design,” and claimed that it “does absolutely nothing,” while also lacking a strong connection to Ripple.

He also raised the issue involving Ripple’s regular XRP sales. Dorman said the company sells about $3 billion to $4 billion worth of XRP each year and uses the money to fund equity buybacks. To him, the crypto community often discusses token buybacks but does not question why Ripple sells XRP tokens while buying back its own company stock.

However, several details about XRP and the XRP Ledger (XRPL) discredit some of the concerns from the Arca executive. For one, XRP’s lack of connection to Ripple is a feature, not a bug, as it remains favorable to the XRP ecosystem.

Specifically, the XRPL runs as an open-source and decentralized blockchain run by over 100 independent validators operated by universities, exchanges, and businesses across the world. This means Ripple does not control the network, even if authorities tried to force the company to do so.

The network’s design also separates the token from corporate control. XRP has a fixed supply of 100 billion tokens, and developerscannotcreate more. The idea behind XRP also existed before Ripple was founded, which also shows that the token and the company are not the same thing.

Also, claims that XRP does “absolutely nothing” fall apart when considering its utility in payments and the XRPL’s features. Notably, the XRPL includes built-in tools for tokenization, decentralized finance, and NFTs. It also offers a native decentralized exchange and escrow features.

The network can handle around 1,500 transactions per second, while fees stay at fractions of a penny. Data from the ecosystem also shows that the XRPL currently hosts more than $2.3 billion worth of tokenized real-world assets.

Meanwhile, developers have also introduced updates like Permissioned Domains, which aim to make it easier for institutions to use the network in a compliant way.In addition, a native lending protocol is under development.

XRP also acts as a bridge asset for cross-border payments. Through the Ripple Payments system, financial institutions settle international transfers instantly without holding money in foreign accounts ahead of time. The service has already processed billions of dollars in payment volume.

While Dorman questioned Ripple’s XRP sales, the company actually releases its tokens, about 200 million XRP each month, as part of a long-term plan to reduce its holdings after the original XRPL creators allocated 80% of the total supply to the firm. Former Ripple CTO, David Schwartz, confirmed earlier that the firm’s goal is to reduce its balance.

However, to prevent large market shocks, Ripple locked much of the balance in escrow to release the tokens periodically. Data shows that the 200 million XRP released monthly equals roughly 0.1% of XRP’s monthly trading volume, suggesting that it has limited direct pressure on the price.

Meanwhile, besides XRP, Dorman also questioned the investment case for Bitcoin. He highlighted the ongoing discussion around quantum computing risks, saying the technical fix may be simple, but coordinating it across the network would create governance challenges.

The Arca executive also argued that Bitcoin’s image as digital gold has weakened, especially since tokenized gold now exists on blockchain networks. He also said Bitcoin does not work well as an inflation hedge or a medium of exchange, since stablecoins dominate everyday crypto payments.

Dorman also questioned the current market valuations of Ethereum and Solana. He argued that both networks deal with high token inflation, which can outweigh fee revenue and sometimes allow market caps to rise even while token prices fall.

Looking ahead, he believes three parts of the crypto industry currently show the strongest growth. These include stablecoin payments, decentralized finance, and real-world asset tokenization, areas that have captured attention from firms like Securitize and BlackRock.