XRP is flooding Ethereum and Solana, but this invisible layer exposes your wallet to a $1.5 billion risk

XRP would capture $8.26 billion in liquidity on Ethereum if wrappers reached 5% of total chain liquidity, while tapping Solana for $810 million.Where risk migrates

The shift from native XRP to wrapped representations transfers risk from protocol-level consensus to custodial and bridge infrastructure.

Custodian and issuer risk comes first. Every wrapped XRP product requires someone to hold the underlying asset. For wXRP, that is Hex Trust. For cbXRP, Coinbase. For eXRP, Axelars validator network controls the bridge state and mint/burn logic.

XRP wrappers add another layer of risk on top of the XRP Ledger‘s consensus, as they are centralized entities that promise to hold and redeem XRP. If the custodian halts withdrawals, declares insolvency, or suffers a hack, the wrapped token’s backing disappears regardless of what happens on XRPL.

Bridge and interoperability risk is the second layer. Hex Trust‘s wXRP uses LayerZero’s OFT standard for cross-chain coordination, managing supply via off-chain message-passing and on-chain validation.

Axelars eXRP depends on validators relaying state between XRPL and the EVM sidechain.

Bridges have been the single largest target in DeFi exploits. Hacken‘s 2025 Web3 Security Report showed that over $1.5 billion of the $3.1 billion stolen from crypto services in this year’s first half relates to bridges, accounting for over 50% of DeFi losses.

Vitalik Buterins argument against cross-chain architectures emphasizes that bridges do not diversify risk but rather concentrate it. A bug in a bridge contract can drain reserves across all connected chains simultaneously.

Redemption mechanics form the third risk domain. Hex Trusts wXRP restricts minting and redemption to authorized participants, not end users. If those merchants become insolvent or halt operations, liquidity providers holding wXRP have no direct path to redeem for native XRP.

The token can trade freely on secondary markets, but its convertibility depends on intermediaries remaining functional.

XRP already exhibits fragmentation: Wrapped.com‘s Ethereum wXRP, Hex Trust’s multi-chain wXRP, Coinbase‘s cbXRP on Base, and Axelar’s eXRP all claim 1:1 backing but operate on separate infrastructure.

A liquidity shock or operational pause in one version creates arbitrage gaps, temporary de-pegs, and user confusion about which wrapper holds value.

Testing for infrastructure versus wrapper theater

The expansion can be evaluated through four questions that reveal whether the product improves market plumbing or adds synthetic layers without reducing systemic risk.

First, who holds the XRP, and under what regime？ Hex Trust and Coinbase position themselves as regulated custodians with segregated client assets.

RLUSD is regulated by the New York Department of Financial Services, and Ripple just got a national bank charter. That regulatory scaffolding determines whether users have legal recourse if custody fails.

A wrapper that cannot clearly identify its custodian, audit trail, and reserve attestation is not infrastructure, it is an unregulated promise.

Second, how many dependencies sit between the user and native XRP？ A Solana DeFi user holding wXRP depends on XRP remaining on XRPL, Hex Trust maintaining reserves, LayerZero OFT messages propagating correctly, and Solana smart contracts executing as designed.

Native XRPL settlement depends on XRPLs consensus. Wrapped XRP has four or five.

Third, what economic role does XRP serve once wrapped？ RLUSDs $1 billion circulation and positioning as a payments stablecoin create tension. A stable, regulated dollar token may be better suited for institutional settlement than volatile XRP.

If true, wrapped XRP ceases to function as a transactional medium and becomes collateral sitting atop a stablecoin-based payments layer.

Fourth, is the risk compensated and transparent？ Bridges remain the industrys preferred attack surface, with billions in losses since 2022. If a wrapper offers marginal convenience but depends on an opaque custodian or experimental bridge design, the trade-off is asymmetric.

By contrast, if wXRP/RLUSD pairs develop deep liquidity on audited protocols with circuit breakers, the risk/return calculation becomes defensible.

Risk reallocation

XRPs expansion across Ethereum, Solana, Base, and the XRPL EVM sidechain is not a decentralization narrative. It is a liquidity-for-custody trade.

The wrapped tokens improve access to deeper markets and richer protocol integrations. However, they replace the XRP Ledgers trustless settlement with trusted custodians, experimental bridges, and fragmented redemption flows.

For institutions evaluating whether to deploy capital into wrapped XRP, the calculus is not “does this expand XRPs reach？” but “does the custodial and bridge infrastructure meet the same reliability standard as the native ledger it wraps？”

The current architecture works as long as nothing breaks. The question is what happens when something does.