Mike Novogratz Warns: XRP and Cardano Must Deliver Real Utility Beyond Their Fan Communities

As the cryptocurrency market matures, industry observers increasingly distinguish between hype-driven narratives and assets with tangible value propositions. According to Mike Novogratz, founder and CEO of Galaxy Digital, two major cryptocurrencies—XRP and Cardano’s native token ADA—face critical pressure to demonstrate genuine utility beyond their loyal communities.

In recent discussions, Mike Novogratz raised a fundamental question about the sustainability of community-dependent tokens: “Can Ripple hold it together? Can Cardano hold it together?” This skepticism stems from a critical gap between market valuation and actual on-chain utility.

Weak On-Chain Activity Contradicts Massive Market Valuations

Despite commanding significant market positions, both XRP and ADA show surprisingly limited on-chain engagement relative to their market capitalizations. Recent data reveals the disparity clearly: XRP maintains a market capitalization of approximately $114.40 billion, positioning it as the fifth-largest cryptocurrency globally, yet active participation metrics remain modest. Similarly, ADA sits at around $12.89 billion in market value, hovering near the 12th spot.

The community presence for both assets remains strong—XRP has maintained its passionate supporter base, while Cardano, spearheaded by founder Charles Hoskinson, has fostered what Mike Novogratz describes as “a strong community.” However, Novogratz observes that strength in community does not automatically translate to network usage: “He’s kept the Cardano community with a blockchain that people don’t really use a lot.”

On-chain metrics underscore this concern. Cardano’s holder base spans nearly 10 million addresses, while XRP’s reaches over 7.5 million addresses. These numbers pale in comparison to competing platforms like Solana, which boasts a $70.01 billion market cap and typically processes millions of active transactions daily driven by DeFi protocols, decentralized applications, and NFT activity.

The Shift Toward Revenue-Based Token Valuation

Mike Novogratz articulates a broader market transformation: tokens that don’t function as digital money—distinguishing them from Bitcoin—will increasingly be valued according to business fundamentals. This means examination of revenue generation, measurable usage patterns, and sustainable economic models.

For XRP specifically, Ripple designed the token as a bridge asset facilitating fast, low-cost cross-border payments through its RippleNet infrastructure, partnering with various financial institutions. Yet critics persistently highlight that organic network activity fails to justify the token’s multi-billion dollar market position. The organization’s reliance on partnership announcements rather than organic adoption presents an ongoing valuation challenge.

This fundamental shift away from community enthusiasm toward metrics-based assessment represents the market’s maturation. Novogratz emphasizes that future performance depends on whether projects can transition from fan loyalty to demonstrable utility—a transition far more challenging than building initial excitement.

Real Revenue Models: The Emerging Success Formula

Emerging examples illustrate Mike Novogratz’s point effectively. Hyperliquid, a decentralized perpetuals exchange platform, generates authentic revenue and systematically deploys most profits toward token buybacks, creating equity-like economics that align incentives between platform and token holders. This contrasts sharply with community-dependent models where token value derives primarily from user sentiment.

Similarly, Pudgy Penguins demonstrates evolution beyond speculative “digital luxury goods.” The platform has transformed into a multi-vertical consumer IP ecosystem, strategically acquiring mainstream users through toys, retail partnerships, and viral media before channeling them into Web3 environments through games and NFT experiences. The project’s token distribution spans over 6 million wallets, while its retail operations have exceeded $13 million in sales with over 1 million units sold, and gaming experiences like Pudgy Party reached 500,000 downloads within two weeks.

These models represent the direction Mike Novogratz and other market observers expect: protocols that generate verifiable revenue, sustain operational economics, and demonstrate genuine user demand beyond initial speculation cycles.

The Test Ahead for Established Communities

The fundamental challenge facing XRP and Cardano remains unchanged: transforming committed communities into networks with measurable utility and revenue-generating activity. Community strength provides a foundation, but as Mike Novogratz suggests, it proves insufficient when competing against platforms offering tangible value creation mechanisms.

For these projects to justify their market valuations, they must answer the central question: can community loyalty persist and expand in an environment where new tokens consistently offer real revenue generation and measurable value creation? The answer will define whether these established communities emerge as mature blockchain networks or remain examples of sentiment-driven assets in an increasingly fundamentals-focused market.