We agree with the proposed recommendations and support the approach of starting with conservative parameters that can be scaled up as cbXRP matures on Base.
We’d like to add perspective regarding the DEX liquidity concerns highlighted in the analysis. While the current DEX liquidity shows significant slippage (40-50% for a 500K cbXRP sell), this risk is substantially mitigated by cbXRP’s unique relationship with Coinbase:
- cbXRP is automatically redeemed 1:1 for native XRP when deposited into a Coinbase wallet
- XRP can then be swapped into stables with deep liquidity on Coinbase
- This creates a reliable liquidation pathway that doesn’t depend solely on DEX infrastructure
This same mechanism has enabled lending protocols including Moonwell and Aave to safely maintain high Collateral at Risk positions in cbBTC, despite limited DEX liquidity. The key insight is that liquidators can tap into CEX liquidity rather than being constrained by on-chain liquidity, using Coinbase as a bridge.
Importantly, only one liquidator needs to be present in any geographical location where Coinbase operates to access this CEX liquidity mechanism. Given Coinbase’s broad operational footprint, we can safely assume at least one liquidator will be available to execute this arbitrage, making the liquidation infrastructure highly reliable.
Therefore, while we support the conservative initial parameters, we believe the protocol can confidently scale these parameters over time with less concern about DEX liquidity constraints than would typically apply to other assets.
To evaluate the commercial potential of cbXRP, we examined the usage patterns and market dynamics of cbBTC and cbETH on Base. As demonstrated in the charts below, lending emerges as a primary use case for both cbBTC and cbETH. By observing cbBTC’s supply over time on Base, we see steady growth and increasing user adoption. We anticipate that cbXRP will follow a similar trajectory.
We look forward to seeing cbXRP integrated into Moonwell’s Core markets.