Xpring, Ripple’s investment arm, is claiming Bitcoin and Ethereum users are dumping the network for XRP. This, according to the financial arm, is due to the increasing network congestion that has reached an abysmal point among other dreadful issues faced by the two networks.
In a blog post, Xpring reflects on the financial market crumble that happened lately, which it claims put some blockchain network to a great litmus test.
During this period, market activities generally increased on the Bitcoin and Ethereum network, and resulted in a seemingly hardened network congestion. The transaction fees on both Ethereum and Bitcoin surged higher and went “5x” the normal charges.
Users witnessed extreme difficulties moving their funds from one exchange to another, resulting into high fees and delayed fund processing. This hampering customer’s satisfaction since they could not get their funds at the right time.
Moving these currencies in/out of exchanges became extremely difficult due to high fees and delayed processing.
Xpring says it saw unquestionable evidence that lots of Ethereum users shifted to digital asset XRP especially for exchange balance transfers.
Xpring says since XRP was fashioned “with value transfer on top of mind,” the sudden move did not come as a surprise.
According to the capitalist arm of Ripple, XRP is good and affordable for a wide range of network loads, compared to Ethereum where transaction fee and gas price are the network’s determinants of its healthiness.
In a chart presented by Xpring, when Ethereum cost per transaction goes higher, it is tantamount to more XRP cross-exchange transactions. This is noticed when there is severe congestion on the Ethereum network. Xpring employed the median cost to be able to calculate the claim.
In essence, there’s a great correlation between Ethereum higher fees, and XRP higher volumes.
A case in point is the congestion that occurred on May 12, 2020 on the Ethereum network where its transaction fees skyrocketed by 400%. What followed was that XRP cross-exchange transactions increased by 226%.
Par the findings, Ethereum and Bitcoin cross-exchange transactions moved downward with increased network congestion. This is linked to the fact that traders making use of XRP as an alternative rebalancing asset.
Xpring noted that it is likely that traders do not have enough XRP for liquidation or rebalancing, resulting in the conversion of Ethereum into XRP digital currency as a link currency.