On-Demand Liquidity (ODL)

How Ripple's ODL product uses XRP as a bridge currency to eliminate pre-funded accounts in cross-border payments.

On-Demand Liquidity (ODL) is the specific part of Ripple's payment offering that actually uses XRP as a bridge asset to move value between currencies in real time.

The problem: pre-funded accounts

In traditional cross-border payments, a payment provider that wants to send money from, say, US dollars to Philippine pesos typically needs to already hold a pool of pesos in a local account (a "nostro" account) to pay out from, funded in advance. Maintaining these pre-funded accounts across every currency corridor a business operates in ties up significant capital that could otherwise be put to productive use.

How ODL removes the need for pre-funding

Instead of holding pre-funded pesos, a payment provider using ODL can:

1. Convert US dollars to XRP at the moment a payment is initiated.
2. Send that XRP across the XRP Ledger — settling in seconds, per ledger close — to a market maker or exchange on the receiving end.
3. Immediately convert that XRP to Philippine pesos, which are paid out to the recipient.

The entire round trip — currency A to XRP to currency B — happens within roughly the same few seconds it takes the underlying XRPL transaction to settle, meaning the payment provider only needs to hold XRP (or momentarily touch it) rather than maintaining separately funded accounts in every destination currency.

Why this matters commercially

For payment providers operating in many currency corridors, the capital freed up by not needing dozens of pre-funded nostro accounts can be substantial — this capital-efficiency argument has been Ripple's central pitch for ODL to banks and money transfer businesses.

Real-world usage and setbacks

ODL's best-known pilot partner was MoneyGram, which began using it in 2019 for a portion of its cross-border payment flows. That partnership ended in 2021, with MoneyGram citing the uncertainty created by the SEC's lawsuit against Ripple as a factor — a concrete example of how the legal proceedings (see SEC v. Ripple Overview) had real commercial consequences for Ripple's flagship XRP-based product line, independent of the case's eventual outcome.

Relationship to the DEX

Under the hood, ODL relies on the same order-book decentralized exchange (and, since 2024, the AMM) that any XRPL user can access — Ripple's role is providing the software, business relationships, and liquidity partnerships that make it practical for an institution to use that infrastructure reliably at scale, not a proprietary conversion mechanism unavailable to anyone else.