How Ripple uses XRP: The hosted "Gas Station" tool automatically sends XRP for transaction fees.
Institutions holding stablecoins or tokenized assets and operating on the XRP Ledger face a small but real issue: each transaction requires a small amount of XRP to cover transaction fees. According to Ripple Custody’s documentation, Ripple has built a tool to eliminate this issue, treating XRP as “fuel” for these accounts.
The purpose of this tool
This feature is called Gas Station. According to the documentation, Gas Station covers transaction fees for “sponsored” accounts. The enterprise first funds a sponsored account with the network’s native token; when a customer account needs to make a transaction but lacks native tokens, the sponsored account sends the required amount of tokens to it.
On the XRP Ledger, this native token is XRP.
Why would institutions need it?
A bank or fintech company may hold RLUSD or tokenized assets for thousands of clients. Without such a tool, each client account would need to maintain a separate XRP balance to facilitate fund transfers.
Gas Station uses an "on-demand" funding approach. It sends XRP only when fees need to be paid, so businesses do not need to pre-fund each account. According to the documentation, this reduces "operational friction" for users holding non-native tokens.
Specific operating procedures
- The system has detected that a fee balance is required for a certain account;
- Determine whether this account is a sponsored account, either by direct matching or by identifying its domain;
- Estimate the required native token amount;
- The sponsored account sends this amount to the customer's account;
- Relevant activities will be logged for auditing and monitoring purposes.
If no sponsor is found, the transaction will wait for manual funding.
It's not limited to XRP only.
The Gas Station is not limited to the XRP Ledger. It also supports Solana, Tron, and EVM-compatible networks, using each chain’s native token to pay for transaction fees. A sponsoring account can only fund accounts on the same network.
What changes are in the latest version?
Earlier versions used dedicated "bot users" to sign deposit transactions. The current version has been updated to use system-signed intents, with services authenticated through the enterprise's identity provider, eliminating the need to hold user signing keys. The documentation states that existing deployments must complete this setup, or automatic deposits will cease.
What does this mean for XRP?
This tool gives XRP practical utility within Ripple’s institutional custody products. Every sponsored XRPL transaction requires XRP, and the transaction fees on XRPL are burned upon payment.
However, the report suggests that the impact on demand should be viewed rationally. The standard XRPL transaction cost is less than one cent, so the amount of XRP involved is minimal. This feature reflects how XRP is used in real-world scenarios rather than significantly altering the token’s supply and demand dynamics.