Crypto Eri, a prominent figure in the XRP community, recently reached out to Ripple executive David Schwartz for clarification on whether the XRP held by Ripple is part of the “Cash Equivalent” that will back the upcoming stablecoin. This inquiry was prompted by Eric van Miltenburg, Ripple’s SVP for Strategic Initiative, who suggested that the stablecoin would benefit the XRP Ledger (XRPL) during an interview. Miltenburg was responding to concerns that the stablecoin could potentially harm XRP.
Some believe that the stablecoin could reduce Ripple’s reliance on XRP for cross-border payments. However, Miltenburg argued that since the stablecoin is launching on XRPL, it will ultimately benefit the XRP ecosystem. He drew parallels with other blockchain networks, such as Polygon, where stablecoins contribute to the total value locked (TVL) on-chain and enhance trust in the system.
Crypto Eri, however, found a discrepancy with this comparison and sought clarification from Ripple’s CTO, David Schwartz, regarding the assets that would be locked on XRPL. Ripple had previously announced that the stablecoin would be backed by U.S. dollar deposits, U.S. government bonds, and cash equivalents. Eri questioned whether the XRP held by Ripple would be included in the “cash equivalent” category. If XRP is not included, she wondered why Miltenburg compared stablecoins to increased TVL on other chains.
In response, Ripple’s CTO clarified that there is currently no native mechanism to “lock up” assets on XRPL. He suggested that Miltenburg’s reference was likely about how high-quality stablecoins stimulate activities on other blockchains, leading to an increase in locked value. Schwartz also explained that stablecoins are expected to serve various purposes on XRPL, including providing individuals with a means to hold funds without exposure to crypto volatility and serving as assets for automated market makers alongside XRP. Additionally, he noted that the stablecoin could enhance the overall usability and functionality of XRPL.
In essence, Schwartz believed that Miltenburg’s point was that stablecoins enhance the appeal and utility of blockchains in general, rather than just focusing on TVL.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. The views expressed in this article are solely the author’s opinions and do not reflect the opinion of The Crypto Basic. Readers should conduct their own research before making any investment decisions. The Crypto Basic is not responsible for any financial losses incurred.