How Ripple built up ‘social value’: Arca CIO

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In the past few months, we’ve talked about the rise of fundamentals in crypto. 

I take a similar stance to Arca CIO Jeff Dorman when looking at projects: I’m not expecting them to start producing revenue tomorrow, but I’m very aware that projects will need some sort of vision about how they plan to make money. VC raises can truly only get them so far. 

But Dorman, in this week’s episode of the Empire podcast, made an interesting point. Some projects can win in the social value category without necessarily relying on other fundamentals. 

“You’ve got financial value, which is cash flows. You’ve got utility value, which is some form of usefulness. And then you have social value. And social value is real. It’s much harder to define. But you can’t dismiss it,” Dorman explained. He clarified that he’s not just thinking about memecoins or memestocks, but projects that have really catered to and built up social value.

If you’re searching for a winner in this category, it may be Ripple. XRP, at a market cap of $126 billion, is arguably overvalued. 

“ But that doesn’t [mean that] because there is no financial value, there is no utility value. It’s a hundred percent just social value,” Dorman explained. The “ social value of being one of the oldest cryptocurrencies and having this massive following could one day lead to something that does have financial value.”

Dorman compared it to a call option, referring to the contract between a buyer and seller to purchase a stock at a certain price within a set period. 

To its credit, Ripple is eyeing ways to boost its own financial profile. Ripple acquired Hidden Road, giving it access to a new business with the added bonus of a US broker-dealer license. 

And, if we’re to believe a report from Bloomberg last week, Ripple also attempted to approach Circle with a hefty bid between $4 and $5 billion. The bid, at this point, is pretty on par with what Circle itself is eyeing upon public debut, but it’s too early to say whether or not it can debut at that valuation. 

All of this is to say that Ripple is clearly trying to take advantage of its dominance and expand its reach, which has the added potential of boosting its fundamental value. 

So fundamentals aren’t key to success yet, but I also wonder if any other project could copy what Ripple’s done at this stage. It seems to be in a league of its own.

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