Luke Thomas, a prominent crypto enthusiast, has recently ignited the crypto community with a bold claim. According to Thomas, Ripple intends to lock up a significant portion of its 38 billion XRP in escrow as the initial reserve for RLUSD.
1/ Speculation is circulating on Crypto Twitter (X) that @Ripple could custody its entire #XRP escrow to serve as the initial reserve for #RLUSD. Let me explain in simple terms what this means and why $XRP will witness a hyper galactic pump 🚀 if this were true. Thread🧵 below 👇
— Luke Thomas (@DEarthshaker) December 2, 2024
The XRP Escrow Mechanism
Ripple currently maintains a strict escrow mechanism, releasing one billion XRP each month. Typically, 80% of this released XRP is immediately locked back into escrow, while the remaining 20% is sold on secondary markets. In 2024 alone, Ripple sold approximately 3 billion XRP, generating substantial revenue.
The Proposed RLUSD Initiative
Thomas suggests that Ripple could allocate 30 billion coin from its escrow holdings as collateral for RLUSD. This stablecoin would be pegged to the US dollar, offering stability and trust to users. Key aspects of the proposal include:
- Reserve Establishment: 30 billion XRP would be locked in a smart contract, ensuring its security and preventing its use for other purposes.
- RLUSD Creation: RLUSD tokens would be minted, each representing one US dollar. The locked XRP would serve as collateral, guaranteeing the stability of RLUSD.
- Distribution and Utilization: Ripple could distribute RLUSD to its ODL partners, facilitating faster and more cost-effective cross-border transactions on the XRP Ledger (XRPL).
- Enhanced Working Capital: By selling RLUSD to institutional partners, Ripple could acquire fiat currency or other assets, bolstering its working capital and funding future projects.
Potential Impacts on XRP and the XRPL
The implementation of this strategy could have several significant implications:
- Reduced XRP Supply: Locking 30 billion XRP would decrease the circulating supply, potentially driving up demand and price.
- Increased XRPL Liquidity: As ODL partners utilize RLUSD, demand for XRP’s ecosystem could grow, strengthening the XRPL’s utility.
- Market Confidence: A collateral-backed stablecoin like RLUSD would enhance Ripple’s credibility and solidify XRP’s position in the financial ecosystem.
Ripple’s Vision for the Future
Thomas envisions a future where Ripple could become a trillion-dollar company by 2027 or 2028. With increasing regulatory clarity and broader cryptocurrency adoption, traditional financial institutions may offer custodial, trading, and staking services. This could attract new demographics, such as Gen X and Baby Boomers, to the crypto market through investment vehicles like ETFs.
Also Read: Ripple [XRP] Soars 372% in a Month: What’s Driving the Rally and Is a Correction Ahead?
Ripple’s potential RLUSD initiative showcases the innovative applications of blockchain technology and digital assets. If these speculations prove accurate, it could mark a transformative chapter for XRP and Ripple, solidifying their roles in the global financial landscape.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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