ETFs
XRP and Cardano ETFs unlikely to launch anytime soon
2h00 ▪ 4 min read ▪ by Luc Jose A.
Crypto ETFs are gaining ground. However, for the XRP and Cardano communities, the wait could still be longer. A recent GSR study reveals poor scores for both assets, suggesting that the likelihood of seeing XRP and Cardano ETFs approved in the near future remains low. This analysis, based on rigorous decentralization and demand criteria, reveals significant structural weaknesses that hinder their potential for ETFs.
Obstacles to approval of ETFs for XRP and Cardano
The recent release of the ETF Probability Score by GSR highlights the challenges faced by XRP and Cardano cryptocurrencies. The assessment focuses on two main axes: decentralization and demand, each of which plays a very important role in the viability of an ETF.
Decentralization is a complex concept that encompasses permissionless participation, development control, token distribution, and hardware diversity. For XRP and Cardano, the decentralization scores are particularly low, with -0.9 for XRP and -0.1 for Cardano, placing them last and fifth among the evaluated cryptocurrencies, respectively. These scores indicate structural vulnerabilities that could compromise their ability to provide the security and resilience necessary for an ETF.
Meanwhile, demand is measured by metrics such as market cap, trading volume, and community activity. Again, XRP and Cardano perform poorly with scores of -0.2 and -0.5, ranking fourth and sixth. These low demand scores for these two cryptos reflect market dynamics and community appeal that are not robust enough to support the creation of an ETF at this point.
Strengthening decentralization and demand: a necessary step
GSR’s ETF probability score assigns a weight of 33% to decentralization and 67% to demand. And the results of their study highlight cryptos like Ethereum, Solana and NEAR, which far outperform XRP and Cardano on these criteria, and highlight a higher probability of ETF approval for these more established and more in-demand assets. However, this does not mean that the situation is resolved.
Decentralization, while complex to improve, remains an area where progress is possible. For XRP and Cardano, increasing permissionless participation, better distribution of crypto, and increasing the diversity of hardware used to secure the network could strengthen their positions. Projects aimed at increasing decentralization must be supported by clear policies and concrete actions to gain the trust of regulators and investors.
On the demand side, an increase in market capitalization, higher trading volume for both cryptos, and increased community activity are key. These can be driven by technological innovations, strategic partnerships, and wider adoption of their respective platforms. Active engagement with the community and creating real use cases can also play an important role in improving demand.
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Luc José A.
A graduate of Sciences Po Toulouse and holder of a blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I made a commitment to raise awareness and inform the general public about this constantly evolving ecosystem. My goal is to enable everyone to better understand blockchain and seize the opportunities it offers. I strive every day to provide an objective analysis of current events, decipher market trends, relay the latest technological innovations and put into perspective the economic and societal challenges of this ongoing revolution.
DISCLAIMER
The views, thoughts and opinions expressed in this article belong solely to the author and should not be considered investment advice. Do your own research before making any investment decisions.