The Utility Bomb: Why Novogratz Thinks the ‘XRP Army’ Might Not Be Enough for 2026

Mike Novogratz has a way of sucking the oxygen out of a room, especially when that room is filled with the die-hard “armies” of legacy crypto projects. During a recent YouTube sit-down, the Galaxy Digital CEO and his Head of Research, Alex Thorn, didn’t just tip-toe around the utility debate; they dropped a heavy dose of reality on two of the industry’s most polarizing assets: XRP and Cardano.

The core of the argument is simple, yet devastating for those who trade on vibes alone: In a market where capital is no longer cheap and alternatives are everywhere, can a massive market cap sustained primarily by “community” survive without tangible, daily usage? Novogratz isn’t so sure. He’s looking at the 2026 horizon, and he’s seeing a world where crypto assets have to compete not just with each other, but with the likes of SpaceX for an investor’s dollar.

The Ghost Chain Ghost That Won’t Die

For those of us who lived through the 2017 ICO craze, this rhetoric feels hauntingly familiar. Back then, we called them “ghost chains.” Projects raised hundreds of millions based on whitepapers that promised to revolutionize everything from healthcare to the dental industry, only to end up as abandoned digital graveyards with zero active addresses. Cardano and XRP are, of course, far more sophisticated than the scams of yesteryear, but the underlying skepticism remains the same.

Novogratz gave Charles Hoskinson his flowers, acknowledging the Cardano founder’s uncanny ability to keep a community engaged despite what Novogratz called a blockchain that “people don’t really use a lot.” It’s a backhanded compliment that cuts to the bone of the DeFi era. If nobody is swapping, lending, or building on your chain, does the price actually matter, or is it just a monument to past promises? This mirrors the 2020 “DeFi Summer” where we saw projects like Ethereum and Solana actually generate fees while older “Zombies” just sat there, losing ground in everything but social media mentions.

The “utility bomb” here is the realization that loyalty has an expiration date. When an investor looks at their portfolio and sees a high-growth AI startup or a revenue-generating protocol like Aave on one side, and a stagnant legacy token on the other, the “community” sentiment starts to feel like a liability rather than an asset.

Cardano’s Midnight Gambit: Privacy as a Product

To be fair, the teams behind these protocols aren’t sitting idle. They know the clock is ticking. Cardano’s attempt at reinvention centers on “Midnight,” a privacy-focused sidechain. From a technical standpoint, this is a calculated move to capture the institutional market that has, thus far, ghosted the network. Midnight uses zero-knowledge (ZK) technology to allow for confidential smart contracts.

The technical implication here is “selective disclosure.” In the real world, banks and enterprises can’t just broadcast their entire transaction history on a public ledger like Ethereum or the main Cardano chain. They need a way to prove a transaction happened without showing the world the amount or the participants. Midnight is Hoskinson’s play to provide a compliance-friendly privacy layer. It’s an attempt to turn Cardano from a retail-heavy “cult of personality” into a functional piece of enterprise infrastructure. But as Novogratz pointed out, building this isn’t a three-month sprint; it’s a multi-year marathon, and the market’s patience is famously thin.

Ripple’s Billion-Dollar Pivot to Stablecoins and RWA

Ripple is taking a more aggressive, capital-heavy approach to fix its utility problem. They’ve spent roughly $4 billion in 2025 alone on acquisitions, trying to buy their way into relevance beyond just being “the bridge currency for banks” (a narrative that has struggled to gain massive on-chain volume). Their latest weapons? Ripple USD (RLUSD) and Real-World Asset (RWA) tokenization.

The logic is sound: if people aren’t using XRP for cross-border payments at the scale originally envisioned, give them a stablecoin they can actually use in DeFi. By deploying RLUSD across multiple Layer-2 networks, Ripple is trying to insert itself into the liquidity veins of the broader crypto ecosystem. Furthermore, the partnership with Doppler Finance to explore RWA tokenization on the XRP Ledger (XRPL) shows they are chasing the hottest trend of 2024-2025. Tokenizing Treasury bills or private equity on the XRPL would provide the “real-world relevance” Novogratz claims is missing. However, the competition here is fierce—BlackRock is already on Ethereum with BUIDL, and Franklin Templeton is on Stellar and Polygon. Ripple isn’t just fighting for utility; it’s fighting for a seat at a table that’s already crowded.

The Opportunity Cost of Hype

The most biting part of Novogratz’s critique was the comparison to SpaceX. This is a crucial pivot in how we should view the crypto market. In the “Moonboy” era, we compared Bitcoin to gold and XRP to SWIFT. Today, institutional investors like Galaxy Digital compare crypto tokens to private equity and tech giants. If you can own a piece of a company launching rockets into orbit, why would you hold a token that hasn’t seen a significant uptick in on-chain revenue in five years?

This is the “selective capital flow” Novogratz mentioned. The “XRP Army” and the “Cardano Fam” are great for keeping a price floor during a bear market, but they don’t drive the institutional inflows required for a sustained, parabolic bull run. Those inflows go to where the yield is, where the developers are building, and where the users are actually clicking “send.”

Risk Assessment: The Price of Being Wrong

Investors need to weigh the “community premium” against the “utility deficit.” The risk for XRP and Cardano holders is that these projects become the “AOL” of crypto—pioneers that everyone remembers, but nobody uses because they were too slow to adapt to a world that moved toward high-speed L2s and seamless interoperability.

• The Bagholder Trap: High-valuation projects with low “Price-to-Sales” (fees generated vs. market cap) are increasingly vulnerable in a high-interest-rate environment where investors demand actual returns.
• Execution Risk: Cardano’s Midnight and Ripple’s RLUSD are not yet dominant players. There is a very real chance that by the time these features are fully mature, the market will have already moved on to the next shiny thing—likely AI-integrated protocols or modular blockchain stacks.
• Regulatory Overhang: While Ripple has won significant battles against the SEC, the cloud of regulation still stunts the kind of massive institutional integration these tokens need to achieve the utility Novogratz is looking for.

Novogratz isn’t saying these projects are dead. He’s saying they’re on the clock. The era of surviving on Twitter (X) hashtags and charismatic founders is over. Either these chains start processing meaningful, revenue-generating transactions, or they will slowly fade into the background, becoming the expensive relics of a younger, more naive crypto market.

This isn’t financial advice—it’s a wake-up call. The market is getting smarter, and its appetite for “potential” is being replaced by a hunger for “proven.” If you’re holding these assets, you’d better hope those 2025 utility pivots start showing up on-chain sooner rather than later.