Ripple On-Demand Liquidity: Solutions to Fixing DeFi Slippage

On-Demand Liquidity (ODL) is Ripple’s proprietary technology that enables near-instant cross-border payments using the XRP token. Unlike traditional systems, ODL eliminates the need for pre-funded accounts in destination countries*, making transfers faster, cheaper, and more efficient.

In conventional international payment systems, the sending bank must maintain pre-funded accounts in each country it operates. This locks up capital, creates delays, and drives up costs. Moreover, transactions often involve multiple intermediaries, each adding fees and complexity to the process.

ODL solves this problem with a streamlined process: 

1. A bank or fintech converts the sending amount into XRP. 
2. The transaction is routed through the RippleNet blockchain network. 
3. On the receiving side, XRP is instantly exchanged into the target currency. 

The entire process takes just seconds, without intermediaries or the need to pre-fund accounts in foreign countries.

The concept is straightforward: instead of moving money through a complex chain of correspondent banks, ODL shifts liquidity exactly when needed. That’s why it’s called “on-demand.” The result is a practical, efficient solution for cross-border payments and global business operations.

The Case for ODL: Cross-Border Bottlenecks

Cross-border payments in the traditional financial system are complex, slow, and costly. When a bank in one country needs to send funds to a recipient in another, it often relies on a chain of intermediary banks, known as the correspondent banking system. As a result, this structure introduces a number of inefficiencies.

• Long Settlement Times

Transfers can take several hours to days, especially when routed over weekends or through illiquid currency pairs. Each intermediary in the chain adds friction and delay.

• High Transaction Fees

Every link in the network charges its own fee. As a result, cross-border transactions can carry fees of 5–10%, particularly in regions with limited banking access.

• Capital Inefficiency

To facilitate timely cross-border payments, banks must pre-fund accounts in foreign jurisdictions, locking capital in various currencies across correspondent networks. This approach ties up liquidity and reduces overall operational efficiency.

• Lack of Transparency

Users often have little visibility into where their funds are during a transaction or why delays occur. The legacy banking system operates behind closed doors, with each intermediary following its own rules.

These inefficiencies have highlighted the need for faster, cheaper, and more transparent solutions. Ripple’s On-Demand Liquidity (ODL) offers such an alternative, eliminating intermediaries and enabling direct, blockchain-based transfers using XRP as a native bridge asset.

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ODL Benefits for Businesses and Banks

Ripple’s On-Demand Liquidity (ODL) has become a go-to solution for businesses and banks seeking to simplify cross-border payments. Instead of relying on the traditional infrastructure that involves a chain of intermediaries, high fees, and the need to maintain currency reserves in every corridor, ODL offers a fundamentally different model: real-time settlement using XRP as a bridge asset.

For enterprises, this means international transactions are no longer constrained by banking hours or correspondent delays. The system operates 24/7, including weekends and holidays—a critical advantage for global operations. Rather than holding idle capital in dozens of jurisdictions, participants convert fiat into XRP, transfer it via blockchain, and receive the desired currency on the other end instantly. This frees up working capital and reduces overall transaction costs.

In addition to speed and cost savings, Ripple emphasizes transparency. Every ODL transaction is recorded on a public ledger, making it fully traceable and auditable. This streamlines accounting processes, reduces the risk of errors, and strengthens trust between counterparties. Furthermore, ODL works in currency corridors where traditional payment rails are inefficient or don’t exist at all. The system scales without requiring new infrastructure for each market.

This way, Ripple’s ODL does more than accelerate payments—it makes cross-border transactions more accessible, reliable, and predictable.

The XRP–ODL Connection: How the Ecosystem Works

XRP and On-Demand Liquidity (ODL) are two integral components of the Ripple ecosystem. While closely connected, they serve distinct functions.

XRP is a digital asset used as a bridge currency in international transfers. It facilitates instant value conversion: the sender exchanges local fiat into XRP, transfers it via the blockchain, and the recipient instantly converts it into their target currency. Thanks to the speed of the XRP Ledger and its low transaction fees, XRP serves as an effective vehicle for moving value across borders.

ODL is the underlying infrastructure that powers this process. It’s Ripple’s infrastructure platform that connects banks, payment providers, and exchanges, automating the end-to-end transaction flow. ODL automates everything from currency conversion on the sender’s side to fund delivery on the receiver’s end, including liquidity sourcing and transaction routing.

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Put simply:

• XRP is the fuel—a universal unit of value that flows through each transaction.
• ODL is the engine—the technology and network that powers logistics and settlement.

Without XRP, instant value transfer via ODL wouldn’t be possible. And without ODL, XRP would remain just another digital asset that lacks real-world utility in cross-border finance. Together, they turn complex and costly international payments into a fast, streamlined, and fully automated process.

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Who’s Using RippleNet and ODL Today

Ripple’s ODL has moved beyond theory and into real-world adoption, with active use by major players in the global financial system. Banks, financial institutions, payment providers, and large enterprises have adopted the technology to enable faster, cheaper, and more transparent cross-border transactions.

Banks and financial institutions use RippleNet to streamline international transfers. Instead of relying on multiple intermediaries, they connect to a single network where payments move directly with minimal delays. This reduces operational costs and helps banks enhance competitiveness.

Payment providers (Remitly, Tranglo or SBI Holdings) use ODL to power high-volume consumer remittances—particularly in Southeast Asia and Latin America, where demand for low-cost, real-time transfers is especially strong.

Large corporations can use ODL to streamline their operations, managing cross-border payments to suppliers and subsidiaries without the need to maintain currency reserves in every region. This frees up working capital and minimizes exposure to foreign exchange risk.

Market makers and exchanges provide the backbone of ODL’s liquidity, facilitating conversion between fiat currencies and XRP. Their role is to ensure price stability and rapid execution, making the system stable and scalable.

More on the topic: Who is a Market Maker and what does he do in the market?

As a result, RippleNet and ODL form an ecosystem where each component reinforces the other: banks gain speed, users benefit from convenience, and providers tap into new markets. This positions ODL not as an experiment, but as part of a broader infrastructure shift in global finance.

ODL Roadblocks: Key Challenges Facing On-Demand Liquidity

Despite its technological strengths, Ripple’s ODL continues to face critical regulatory and structural challenges. These factors limit its broader adoption and global scalability.

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• Regulatory Uncertainty

This remains the primary hurdle. XRP—the core asset behind ODL—has been at the center of legal disputes, most notably Ripple’s ongoing battle with the U.S. Securities and Exchange Commission (SEC). Until the token’s regulatory status is fully clarified, many financial institutions—especially those operating under strict digital asset regulations—are proceeding with caution.

• Dependence on XRP 

ODL’s reliance on a single asset is another structural risk. Unlike platforms that support multiple liquidity pairs, ODL is built entirely around XRP. While this design offers speed and cost efficiency, it also introduces exposure: any drop in XRP liquidity or confidence in the token could impact the entire system.

• Poor Scalability

Rolling out ODL across different jurisdictions requires navigating local regulations, currency controls, and banking infrastructure. As a result, adoption may accelerate in some regions while stagnating in others, not due to technical shortcomings, but because of legal and infrastructure barriers.

Ultimately, ODL remains a promising solution, but its success hinges not only on Ripple’s technical solutions but also on how quickly the broader crypto industry achieves institutional adoption and regulatory clarity.

ODL Outlook: Is On-Demand Liquidity the Future of Cross-Border Payments?

On-Demand Liquidity isn’t just a technological innovation—it’s a new model for cross-border settlements that addresses the core inefficiencies of the traditional system.

• For banks: a tool to reduce costs and accelerate client services. 
• For businesses: a way to unlock trapped capital and access new markets. 
• For end-users: an alternative to slow, expensive international transfers.

That said, the future of ODL depends on two factors: regulatory clarity around cryptocurrencies and the market’s readiness to adopt new financial tools. Over the next few years, all eyes will be on the development of legal frameworks, the growth of RippleNet’s partner ecosystem, and the introduction of features like Dynamic Liquidity Provisioning.

If these barriers are overcome, ODL could become the new standard for cross-border settlement, just as SWIFT once defined the correspondent banking era. However, unlike SWIFT, ODL operates in seconds, without intermediaries, and with full asset control.

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