Ripple CTO David Schwartz recently affirmed that the upcoming Ripple USD (RLUSD) stablecoin will benefit XRP rather than harm it. He shared this view during a discussion at the 2024 XRP Ledger Apex summit’s final session. Schwartz explained the shift towards stablecoins, despite volatile digital assets being previously favored for DeFi activities.
He argued that the evolution of DeFi highlights the critical role of stablecoins. While volatile assets are useful in certain scenarios, stablecoins are essential due to their stability. For instance, they are unsuitable for volatility harvesting but are crucial for pricing, holding funds, and trading to avoid market exposure.
Role Of Stablecoins In Trading And Liquidity
Moreover, Schwartz emphasized that automated market makers (AMMs) need at least two assets for trading and liquidity. This requirement underscores the necessity for multiple asset classes in DeFi. He likened the importance of having asset options to the power of “or” versus the restriction of “and.” Different use cases and demands thus necessitate a variety of assets.
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In this context, Schwartz highlighted XRP’s privileged position on the XRP Ledger (XRPL). Pathfinding on XRPL always prioritizes XRP liquidity, and auto-bridging ensures trades consider XRP liquidity. Consequently, he concluded that XRP will maintain its role as a bridge asset on XRPL. The introduction of the stablecoin ecosystem will enhance, not diminish, XRP’s utility.
Community And Executive Support
Prominent XRP community figures have echoed Schwartz’s sentiments. Pro-XRP YouTuber Moon Lambo remarked that RLUSD’s launch on XRPL later this year “can’t literally exist without XRP.” These perspectives counter concerns that RLUSD might undermine XRP’s utility in Ripple’s operations.
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Ripple CEO Brad Garlinghouse, also present at the summit, agreed with Schwartz. He stated that RLUSD complements the overall XRP ecosystem. Ripple’s initiatives aim to ensure XRP’s success.
Garlinghouse emphasized that stablecoin liquidity provides better on-ramps and off-ramps, benefiting all users. He assured that this does not detract from Ripple’s commitment to growing the XRP ecosystem.
