Ripple CTO David Schwartz responds as the Ripple stablecoin RLUSD spikes 6% on the back of the recent XRP price rally.
Ripple’s stablecoin, RLUSD, recently experienced a notable price surge, temporarily climbing to $1.04, then further to $1.06, before settling at $1.02. The fluctuation coincided with XRP’s strong performance, as the cryptocurrency surged past $3, gaining 31% over five days.
Ripple CTO Responds to RLUSD Price Spike
Notably, this behavior was observed on XPMarket, a platform that tracks data on the XRP Ledger (XRPL), with its CEO Artur Kirjakulov spotlighting it on X. In response, Ripple CTO David Schwartz addressed the anomaly, attributing it to thin market dynamics on decentralized exchanges (DEXs).
Schwartz explained that the rise in XRP’s price could temporarily pull RLUSD’s value higher in illiquid markets. He emphasized that such fluctuations occur when XRP’s value adjusts faster than offers on the RLUSD/XRP trading pairs can stabilize.
My bet is that it's looking at a thin XRP/RLUSD market only. When the price of XRP goes up, it will temporarily drag the price of RLUSD up with it until offers on that market can re-adjust. (And vice-versa if XRP's price goes down.)
— David "JoelKatz" Schwartz (@JoelKatz) January 16, 2025
Notably, such a mismatch leads to short-term deviations until the market realigns. The Ripple CTO also noted that the reverse could happen if XRP’s price drops, potentially dragging RLUSD down momentarily.
Further Details
Meanwhile, Mayukha Vadari, a senior software engineer at RippleX, questioned XPMarket’s methodology for calculating RLUSD prices. She asked whether XPMarket used XRP/RLUSD pairs or pairs involving other stablecoins.
Kirjakulov clarified that their calculations exclusively rely on DEX trading data. He explained that XPMarket does not track centralized exchanges listed on aggregators like CoinMarketCap, as these platforms are less popular among the broader crypto community.
Only DEX, as those CEXs on CMC are very exotic, not actually used by wider crypto community, so we don't track those. Nor we received any requests to track them. But having them would surely keep the price at 1, as we use weighted average. Like with XPM token.
At some point,…
— Dr. Artur Kirjakulov (@Kirjakulov) January 16, 2025
Notably, the XPMarket CEO further emphasized that their pricing mechanism uses a weighted average based solely on DEX activity.
According to him, XPMarket calculates RLUSD’s price by first determining its value in XRP. It then multiplies this value by XRP’s weighted average price from CoinMarketCap or CoinGecko. Kirjakulov noted that this approach results in RLUSD appearing more expensive on DEXs during periods of market fluctuation.
Meanwhile, Kirjakulov admitted that XPMarket experienced a temporary issue with its logger, which initially showed RLUSD spiking to $1.05. However, he clarified that the real maximum observed on the DEX was $1.025.
RLUSD Stabilizes
Notably, minor price increases in RLUSD such as this could create arbitrage opportunities for traders. If RLUSD traded at $1.06 on a DEX while remaining at $1 elsewhere, arbitrageurs could profit by buying RLUSD cheaply and selling it at the inflated price. For instance, purchasing 500,000 RLUSD for $500,000 and selling it at $1.06 could yield a $30,000 profit.
Following the spike, RLUSD’s price has since stabilized at $1 on XPMarket, its intended peg. Notably, price tracking platforms like CoinMarketCap and CoinGecko did not record the anomalous increase, as these platforms rely on broader data sources, including CEXs.
It bears mentioning that amid the excitement surrounding RLUSD’s launch in December 2024, Schwartz had earlier cautioned investors against speculative behavior.
He emphasized that the stablecoin was not designed as a quick-profit asset. Despite these warnings, some investors incurred losses during the launch by overpaying for RLUSD in XRP.
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