Ripple’s Chief Technology Officer, David Schwartz, has put forward the argument that the upcoming Ripple USD (RLUSD) stablecoin will actually benefit XRP rather than harm it.
Schwartz shared his perspective during a casual discussion at the final 2024 XRP Ledger Apex summit yesterday. The moderator asked Ripple executives to explain the transition from XRP to stablecoins, considering that volatile digital assets were previously seen as more suitable for DeFi activities.
Schwartz elaborated on the necessity of stablecoins in the evolving DeFi space, emphasizing their role as key enablers. While volatile assets have their uses, stablecoins provide stability in various scenarios such as volatility harvesting. They are essential for tasks like pricing, holding funds, and trading without market exposure.
Additionally, Schwartz highlighted the importance of having multiple asset classes to effectively navigate the DeFi landscape, noting that automated market makers require at least two assets for trading and liquidity.
In terms of XRP’s position in liquidity services, Schwartz pointed out its privileged role on the XRP Ledger. Despite the introduction of the stablecoin ecosystem, XRP will continue to function as a bridge asset on the XRPL, maintaining its significance.
Ripple’s CEO, Brad Garlinghouse, echoed Schwartz’s sentiments, emphasizing that RLUSD complements the XRP ecosystem. Stablecoin liquidity provides better on-ramps and off-ramps for users, enhancing the overall experience without detracting from XRP’s growth.
Key figures in the XRP community have responded positively to these explanations, countering concerns that RLUSD would diminish XRP’s utility in Ripple’s operations.
It is important to note that the views expressed in this article are informational and should not be considered financial advice. Readers are encouraged to conduct their own research before making investment decisions.