Cardano Founder Compares XRP to Tether, Says Ripple’s Model Has No Benefit to XRP Holders

Charles Hoskinson, the Cardano founder, recently compared XRP to Tether, arguing that Ripple’s business model does not benefit XRP holders.

According to Hoskinson, XRP holders do not have any actual stake in Ripple’s business and do not benefit from how the company makes money, even though Ripple sells XRP regularly to fund its operations.

Key Points

• Charles Hoskinson compared Ripple to Tether, arguing that the company’s model does not benefit XRP holders.
• He said Ripple’s acquisitions and development of institutional tools show the company is moving into “Web2.5,” like Tether.
• According to Hoskinson, Ripple has continued to sell XRP while using the proceeds to acquire assets.
• He warned that Brad Garlinghouse is pushing for policies that could favor established assets and treat new entrants as securities.

Hoskinson Says Ripple Pushing into Web 2.5 Like Tether

Hoskinson shared these views during an interview on The O Show with host Wendy O. He spoke about the emergence of what he calls Web 2.5, which involves a combination of blockchain and traditional business models.

According to him, firms like Circle, currently building Arc, and projects such as Canton are pushing into this Web 2.5 system. He believes much of the market’s future growth will happen in this area and said Ripple may be moving in the same direction.

Specifically, Hoskinson explained that Ripple is entering the Web 2.5 space through major business moves and a focus on institutional clients. 

He mentioned Ripple’s $1.2 billion acquisition of Hidden Road and its efforts to build privacy tools that could allow automated compliance for institutions. He also mentioned Ripple’s development of the RLUSD stablecoin and suggested that this was a “Tether-like approach.”

“None of the Value Accrues to XRP”

According to him, these efforts could bring in large profits for Ripple, but they do not necessarily benefit XRP holders. He said the value created by these activities stays within the company instead of flowing to the token. 

Hoskinson used Tether as an example, where the issuing company keeps the financial gains instead of passing them on to token holders. 

“None of the value has to accrue to XRP; it goes to the Ripple company. Just like all the Tether value doesn’t accrue to Tether holders; it goes to Paolo’s [Ardoino] pockets,” the Cardano founder said.

XRP Does Not Get Any Price Appreciation from Ripple’s Efforts

Wendy pointed out that strong media coverage of Ripple’s developments and a bullish market could still push XRP’s price higher, which could help holders.

In response, Hoskinson said that since Ripple holds a large amount of XRP, they typically build attention, drive the price up, sell XRP, and then use the money to buy other assets. He stressed that XRP holders do not have any legal claim to these assets, which remain under Ripple’s control.

Speaking further, he pointed out that XRP does not offer features like staking rewards or direct participation in the company’s earnings. To him, the whole system just moves a large amount of value to Ripple. 

“It’s basically like Tether from that perspective,” Hoskinson said, “One company gets all the value and the holders, they get some instrument, and they get some network, but they don’t actually get any price appreciation from that.”

Interestingly, XRP proponents have pushed against this claim, arguing that XRP has indeed appreciated considerably over the past few years, including a 20,000% spike in the last decade.

Regulatory Concerns

Hoskinson suggested that Ripple’s model is also similar to what Block.one does with EOS. Notably, Block.one raised $4 billion, with its balance sheet rising to $11 billion in Bitcoin and Ether. He noted that despite this, the EOS network itself did not achieve similar success or receive any benefit.

According to him, unlike Ripple, he did not pre-mine 80% of Cardano’s supply or design a system that involves selling billions of dollars’ worth of tokens each year. He also argued that Ripple does not back XRP, saying the company sells its holdings instead.

Finally, Hoskinson claimed that the Ripple CEO, Brad Garlinghouse, is pushing for rules that would treat most new crypto projects as securities by default. 

He claimed that this would favor established assets like XRP, Bitcoin, Ethereum, and Cardano, while making it harder for new projects to compete, and this could create a market structure similar to traditional finance, where a few projects dominate.