Ripple CTO David Schwartz has argued that the forthcoming Ripple USD (RLUSD) stablecoin would be advantageous to XRP rather than harmful.
Schwartz shared this perspective yesterday during a chit-chat session in the concluding 2024 edition of the XRP Ledger Apex summit.
The host asked Ripple executives to clarify the shift from XRP to stablecoins, given that volatile digital assets were previously considered better suited for DeFi activities.
Why Stablecoin is Necessary
Schwartz explained that the evolution of the DeFi universe has demonstrated the importance of stablecoins, where stablecoins have become key enablers. He pointed out that while volatile assets are useful in some scenarios, stablecoins are crucial in others due to their stability.
He cited volatility harvesting as an example where stablecoins are unsuitable but highlighted their utility in pricing, holding funds (dry powder), and trading when participants want to avoid market exposure.
Furthermore, Schwartz stressed the view by noting that automated market makers (AMMs) require at least two assets for trading and liquidity. This emphasizes that DeFi participants need multiple asset classes to navigate the landscape effectively.
Moreover, the Ripple CTO highlighted the importance of having options by likening it to the power of “or” versus the tyranny of “and.” He stressed that different use cases and demands necessitate a variety of assets.
XRP Holds Privileged Position in Liquidity Services
In this context, Schwartz noted that XRP holds a privileged position on the XRP Ledger (XRPL). For instance, pathfinding always prioritizes XRP liquidity, and auto-bridging ensures trades automatically consider XRP liquidity.
Therefore, Schwartz concluded that XRP will maintain its privileged role as a bridge asset on the XRPL. He stressed that the introduction of the stablecoin ecosystem will not change this but will instead enable more use cases.
Prominent figures in the XRP community have spotlighted this latest explanation from the Ripple executive. Pro-XRP YouTuber Moon Lambo remarked that the RLUSD stablecoin launching on XRPL later this year “can’t literally exist without XRP.”
Ripple’s future stablecoin is GOOD for $XRP.
Also the stablecoin can’t exist on the XRPL without $XRP. Literally. https://t.co/vqRmbncMwf
— Moon Lambo (@MoonLamboio) June 12, 2024
Emphatically, these perspectives counter growing concerns that Ripple’s RLUSD would undermine the existing utility of XRP in Ripple’s operations.
Ripple CEO Agrees
Ripple’s CEO, Brad Garlinghouse, who was also present with Schwartz, emphasized that RLUSD is a complementary addition to the overall XRP ecosystem. Garlinghouse noted that Ripple’s initiatives are always designed to ensure everyone’s success with XRP.
He highlighted that having stablecoin liquidity provides better on-ramps and off-ramps, which benefits all users. “No way does that take away from our commitment to see the XRP ecosystem continue to grow,” he submitted.
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