Probability Weighted Scenarios Ripple's CBDC Future

CBDC Program Winds Down:

SCENARIO A: QUIET ABANDONMENT

PROBABILITY: 40%

- No new CBDC partnerships announced
- Existing pilots conclude without production
- CBDC team further reduced
- Resources fully shift to stablecoins
- CBDC Platform maintained minimally
- No explicit abandonment announcement

EVIDENCE SUPPORTING:
✓ Pivot to stablecoins already underway
✓ Zero production after years of trying
✓ Competition winning major engagements
✓ Executive commentary suggesting shift
✓ RLUSD is clear new priority

- 2025: Reduced CBDC activity
- 2026: Last pilot updates
- 2027+: Effectively dormant

IMPLICATIONS:

• Sunk cost written off

• Resources redirected

• Focus on viable businesses

• No impact (CBDC never connected)

• Neutral

• CBDC thesis fully invalidated

• Should already be discounted

Ongoing But Not Growing:

SCENARIO B: MAINTENANCE MODE

PROBABILITY: 35%

- CBDC Platform maintained
- Existing pilots continue slowly
- Maybe one small country production
- No new major partnerships
- Minimal investment
- Available for inquiries

EVIDENCE SUPPORTING:
✓ Some pilots still active (Colombia, Georgia)
✓ Platform already built (sunk cost)
✓ Small country market exists
✓ Reputation value in having product
✓ May produce reference eventually

- 2025-2026: Slow pilot progress
- 2027+: Maybe one production (small)
- Ongoing: Maintenance level investment

IMPLICATIONS:

• Minimal resource drain

• Option value preserved

• Not strategic priority

• No impact (unchanged)

• Minor business line

• Not material to valuation

• Background activity

Limited But Meaningful Traction:

SCENARIO C: MODERATE SUCCESS

PROBABILITY: 20%

- 2-4 production CBDCs in small countries
- Colombia or Georgia reaches production
- Creates reference customers
- Attracts other small country interest
- Becomes niche but viable business
- Not major Ripple revenue driver

EVIDENCE SUPPORTING:
✓ Some pilots genuinely active
✓ Small country market exists
✓ Platform is functional technology
✓ May find product-market fit in niche

EVIDENCE AGAINST:
✗ Competition winning larger deals
✗ Strategic pivot suggests internal doubt
✗ No major economy interest

- 2026: First production (possibly)
- 2028: 2-4 small country deployments
- Ongoing: Small but stable business

IMPLICATIONS:

• Minor revenue stream

• Reference customers for credibility

• Niche position established

• Still no impact (design unchanged)

• Small positive for Ripple

• Validates technology if not market

• Not material to XRP

Breakthrough Achievement:

SCENARIO D: MAJOR SUCCESS

PROBABILITY: 5%

- Major economy selects Ripple
- Multiple production deployments
- Competitive position strengthens
- CBDC becomes material business
- Cross-border CBDC involvement
- Strategic priority restored

EVIDENCE SUPPORTING:
✓ Technology exists
✓ Market opportunity is real (long term)
✓ Unpredictable outcomes possible

EVIDENCE AGAINST:
✗ No major economy interest currently
✗ mBridge and competitors ahead
✗ Strategic pivot underway
✗ Institutional credibility gap
✗ Would require major external changes

- Competitor failures
- Major economy decision favoring Ripple
- Reversal of pivot
- Years of execution

IMPLICATIONS:

• Significant business line

• Strategic value

• Competitive position improvement

• Still no direct impact

• But Ripple success = positive sentiment?

• Material positive for Ripple equity

• Minor sentiment positive for XRP

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Evidence Basis:

PROBABILITY DERIVATION:

SCENARIO A (40%): QUIET ABANDONMENT

- Pivot already underway (+15%)
- Zero production 4+ years (+10%)
- Executive statements (+10%)
- Competitive losses (+5%)

SCENARIO B (35%): MAINTENANCE MODE

- Platform built (sunk cost logic)
- Some active pilots
- Small country demand exists
- Neither full abandon nor invest

SCENARIO C (20%): MODERATE SUCCESS

- Technology works
- Small country niche viable
- Some pilots may convert
- Not impossible

SCENARIO D (5%): MAJOR SUCCESS

- Requires external changes
- Counter to all trends
- But not literally impossible

TOTAL: 100%

CALIBRATION CHECK:

• Current trajectory (negative)
• Strategic signals (pivot)
• Competitive position (weak)
• But uncertainty (can't know future)

Reasonable people might vary ±10%
but not dramatically different.
```

How Probabilities Could Change:

PROBABILITY SENSITIVITY:

FACTORS THAT WOULD INCREASE SUCCESS:

• Colombia announces production timeline
• Major economy initiates pilot
• mBridge encounters serious problems
• Competitor exits market
• New Ripple CBDC leadership

FACTORS THAT WOULD INCREASE ABANDONMENT:

• CBDC team further reduced
• No new partnerships by 2026
• Explicit Ripple statements deemphasizing
• RLUSD success draws more resources
• More competitors win deals

UPDATING FRAMEWORK:

New information → Probability adjustment

Example:
"Colombia announces 2026 production launch"
→ Scenario C: +15% (20→35%)
→ Scenario A: -10% (40→30%)
→ Scenario B: -5% (35→30%)

Explicit framework enables clear updates.

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Weighted Outcomes:

EXPECTED VALUE CALCULATION:

RIPPLE CBDC BUSINESS VALUE:

Scenario A (40%): $0
Scenario B (35%): $50M (maintenance asset)
Scenario C (20%): $200M (small business)
Scenario D (5%): $1B (major business)

Expected Value =
(0.40 × $0) + (0.35 × $50M) + (0.20 × $200M) + (0.05 × $1B)
= $0 + $17.5M + $40M + $50M
= $107.5M expected value

INTERPRETATION:

~$100M expected value for CBDC business.
Primarily driven by small upside scenarios.
75% probability of <$50M outcome.
Not material to Ripple's overall valuation.

FOR XRP:

All scenarios: XRP not connected
Expected XRP impact from CBDC: ~$0
Sentiment effects: Minimal

CBDC should not factor into XRP valuation.
```

How to Use This Analysis:

FOR DIFFERENT STAKEHOLDERS:

- Pivot makes sense given probabilities
- Maintain optionality (Scenario B)
- Don't over-invest given upside limits
- RLUSD higher expected value

- CBDC not material driver
- Focus on payments, RLUSD, other businesses
- ~$100M expected value = small part of company
- Don't pay premium for CBDC optionality

- Remove CBDC from mental model
- Focus on actual XRP drivers
- No probability weight changes XRP thesis
- CBDC is red herring

- Ripple is an option among many
- Competitors may be better positioned
- Watch production track record
- Technology works; business model unclear

What to Watch:

KEY INDICATORS TO MONITOR:

FOR INCREASING SUCCESS PROBABILITY:

✓ Production announcement (any country)
✓ Major economy pilot (G20)
✓ Competitor setbacks
✓ Ripple CBDC investment increase
✓ New CBDC partnerships (major)

FOR INCREASING ABANDONMENT PROBABILITY:

✗ Further CBDC team reductions
✗ More RLUSD emphasis
✗ No new pilots by 2026
✗ Existing pilots quiet conclusion
✗ Explicit deprioritization statements

QUARTERLY CHECK:

Ask: "What new evidence emerged?"
Update probabilities accordingly.
Document reasoning.

ANNUAL REVIEW:

Full reassessment.
Are scenarios still appropriate?
Any structural changes?

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✅ Quiet abandonment is most likely single scenario — 40% probability based on pivot evidence, zero production, competitive losses.

✅ Major success is very unlikely — 5% probability requires multiple external factors changing.

✅ Expected business value is limited — ~$100M expected value, not material to Ripple's overall valuation.

✅ XRP unaffected across all scenarios — No scenario involves XRP-CBDC connection.

⚠️ Exact probabilities — Reasonable ranges exist; others might weight ±10% differently.

⚠️ External events — Competitor failures, regulatory changes, or market shifts could alter landscape.

⚠️ Ripple internal decisions — Strategy could change; pivot could reverse (unlikely but possible).

📌 75% probability of minimal outcome — Scenarios A+B (75%) produce <$50M business value.

📌 Success requires external changes — Ripple can't create success alone; depends on competitor failures and market shifts.

📌 Time horizon is long — Even moderate success takes 3-5+ years to materialize.

Probability-weighted analysis confirms what individual lessons suggested: Ripple's CBDC business is unlikely to produce meaningful results. The most likely outcome (40%) is quiet abandonment; the next most likely (35%) is maintenance mode. Together, that's 75% probability of minimal business value.

Only 25% of scenarios produce meaningful business, and only 5% produce major success. The expected value (~$100M) is not material to Ripple's overall valuation and should not factor into XRP investment decisions.

This isn't bearish commentary—it's honest assessment using available evidence. The framework allows updates as new information emerges.

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Assignment: Build probability-weighted scenario analysis for a technology business.

Requirements:

Part 1: Scenario Development (1 page)

• Define 3-5 distinct scenarios
• Describe what happens in each
• Identify evidence for/against each

Part 2: Probability Assignment (1/2 page)

• Assign probability to each scenario
• Justify with specific evidence
• Ensure probabilities sum to 100%

Part 3: Implication Mapping (1 page)

• Business value implication
• Stakeholder impact
• Timeline

Part 4: Expected Value and Decision Framework (1/2 page)

• Calculate expected value

• Provide decision guidance for investors

• Identify monitoring indicators

• 3 pages total

• Explicit probabilities

• Evidence-based reasoning

• Scenario quality (25%)

• Probability justification (30%)

• Implication clarity (25%)

• Framework practicality (20%)

Time Investment: 2-3 hours
Value: Transferable skill for technology investment analysis.

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1. Most Likely Scenario Question:

What is the most likely single scenario for Ripple's CBDC business?

A) Major success with multiple production deployments
B) Quiet abandonment as resources shift to stablecoins (40% probability)
C) Becoming the dominant global CBDC platform
D) Central banks requiring XRP

Correct Answer: B
Explanation: Quiet abandonment (40%) is the most likely single scenario based on: strategic pivot already underway, zero production after 4+ years, competitive losses, and executive commentary. This doesn't mean it's certain—just most likely among scenarios.

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2. Combined Probability Question:

What's the combined probability of minimal business outcome (abandonment or maintenance)?

A) 25%
B) 50%
C) 75% (Scenario A: 40% + Scenario B: 35%)
D) 95%

Correct Answer: C
Explanation: Scenarios A (quiet abandonment, 40%) and B (maintenance mode, 35%) together total 75% probability. These represent minimal business value (<$50M). Three-quarters probability of limited outcome reflects current trajectory and evidence.

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3. Expected Value Question:

What's the approximate expected value of Ripple's CBDC business across all scenarios?

A) $0
B) ~$100 million
C) $1 billion
D) $10 billion

Correct Answer: B
Explanation: Expected value = (0.40 × $0) + (0.35 × $50M) + (0.20 × $200M) + (0.05 × $1B) = ~$107.5M. This weighted average is primarily driven by small upside scenarios. Not material to Ripple's overall valuation.

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4. Major Success Probability Question:

What probability is assigned to major CBDC success (major economy adoption)?

A) 40%
B) 20%
C) 5%
D) 0%

Correct Answer: C
Explanation: Major success is assigned only 5% probability because it requires: competitor failures, major economy choosing Ripple (no current interest), reversal of strategic pivot, and years of execution. Possible but requires multiple external changes.

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5. XRP Impact Question:

How does XRP investment thesis change across CBDC scenarios?

A) Dramatically—XRP depends on CBDC success
B) Not at all—XRP is disconnected from CBDC in all scenarios
C) Only in major success scenario
D) XRP becomes worthless if CBDC fails

Correct Answer: B
Explanation: XRP is disconnected from CBDC in ALL scenarios. No scenario involves XRP-CBDC connection (by Ripple's design). Whether CBDC succeeds or fails, XRP thesis is unchanged. CBDC should be completely excluded from XRP investment analysis.

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For Next Lesson:
Lesson 17 synthesizes the entire course into investment implications—what sophisticated investors should conclude about Ripple, XRP, and CBDC.

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End of Lesson 16

Total words: ~3,600
Estimated reading time: 50 minutes
Estimated deliverable time: 2-3 hours

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Course 59: Ripple's CBDC Platform Deep Dive
Lesson 16 of 18
XRP Academy - The Khan Academy of Digital Finance