Ripple CTO Confirms RLUSD Stablecoin Is Beneficial for XRP

Ripple CTO David Schwartz believes that the upcoming Ripple USD (RLUSD) stablecoin will be more beneficial than detrimental to XRP.

Schwartz shared this view yesterday during a lighthearted conversation at the end of the XRP Ledger Apex Summit 2024.

The moderator asked the Ripple executive to clarify the reasons for the shift away from XRP and toward stablecoins, considering that previously volatile digital assets were considered more suitable for DeFi activities.

Why do we need stablecoins?

Schwartz explained that the evolution of the DeFi universe has demonstrated the importance of stablecoins, which have become a key enabler. He noted that while volatile assets are useful in some situations, stablecoins become crucial in other situations due to their stability.

He cited volatility harvesting as an example where stablecoins are not applicable, but highlighted their utility in pricing, holding funds (dry powder), and transacting when participants want to avoid market risk.

Furthermore, Schwartz reinforced this point by stating that automated market makers (AMMs) require at least two assets for trading and liquidity. This highlights that DeFi participants need a variety of asset classes to effectively navigate this space.

In addition, Ripple CTO emphasized the importance of having diverse options, comparing it to the power of "or" and the tyranny of "and". He stressed that different use cases and requirements require a variety of assets.

XRP occupies a privileged position in liquidity services

In this context, Schwartz pointed out that XRP occupies a privileged position on the XRP Ledger (XRPL). For example, path finding always prioritizes XRP liquidity, and automatic bridging ensures that transactions automatically consider XRP liquidity.

Therefore, Schwartz concluded, XRP will maintain its privileged role as a bridge asset on the XRPL. He stressed that the introduction of a stablecoin ecosystem will not change this, but will enable more use cases.

Prominent figures in the XRP community have taken notice of the latest explanation from Ripple executives. Moon Lambo, a YouTuber who supports XRP, noted that the RLUSD stablecoin, which will launch on XRPL later this year, “cannot exist without XRP.”

Emphasizing these points counters growing concerns that Ripple’s RLUSD will undermine XRP’s existing utility in Ripple’s operations.

Ripple CEO agrees

Ripple CEO Brad Garlinghouse also attended with Schwartz, emphasizing that RLUSD is complementary to the entire XRP ecosystem. Garlinghouse noted that Ripple’s initiatives are always designed to ensure success for everyone working on XRP.

He stressed that stablecoin liquidity provides better on-ramps and off-ramps, which is beneficial to all users.

“This in no way diminishes our commitment to seeing the XRP ecosystem continue to grow,” he submitted.

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