XRP vs RLUSD – How Ripple’s Stablecoin Could Actually Boost XRP Demand

Sean Williams
RLUSD

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  • XRP remains essential on the XRPL for fees and liquidity, even with RLUSD adoption.
  • Autobridging ensures XRP continues to facilitate efficient trades and liquidity.
  • RLUSD complements XRP, potentially boosting overall network activity and demand.

Concerns have surfaced among XRP enthusiasts that Ripple’s USD-pegged stablecoin, RLUSD, might reduce XRP’s utility within the XRP Ledger (XRPL) ecosystem. Crypto analyst All Things XRP recently addressed these worries, emphasizing that RLUSD is unlikely to replace XRP and may even enhance its position. XRP’s status as the XRPL’s native asset grants it unmatched privileges: it can pay transaction fees, is held by every account without trust lines, and operates free of counterparty risk, freezes, or clawbacks. By contrast, RLUSD relies on Ripple as its issuer and cannot perform these fundamental functions.

Transaction Fees Ensure Constant Demand

A critical factor supporting XRP’s ongoing relevance is its role in transaction fees. Every XRPL transaction, whether using RLUSD or another token, consumes a small amount of XRP. As RLUSD adoption grows, transaction activity may increase, leading to more the coin being burned in fees. This mechanism maintains a baseline demand for the coin, highlighting its indispensable function even in a stablecoin-driven environment.

Autobridging and Liquidity Support

The XRPL’s built-in decentralized exchange (DEX) further reinforces XRP’s utility. Through autobridging, trades automatically route through the coin to maximize liquidity and efficiency. An increase in RLUSD trading pairs naturally expands the need for the coin in bridging operations. While RLUSD provides stability for users wary of volatility, XRP remains the fastest and most globally liquid asset on the ledger. Together, the two assets complement one another, with RLUSD managing price stability and the coin driving transaction processing and cross-border value transfers.

Also Read: Ripple Buys Rail for $200M to Boost XRP and RLUSD

Ripple’s Limited Influence and Network Decentralization

Concerns about Ripple phasing out XRP are mitigated by the network’s structure. Ripple controls only about one percent of XRPL validators, ensuring the company cannot unilaterally change the protocol. XRP is embedded at the protocol level, making it universally required for fees and liquidity, independent of any single issuer.

All Things XRP concludes that RLUSD adoption is likely bullish for the coin. As RLUSD usage grows, more transactions, trades, and tokenized assets will flow through the XRPL—activities that still require the coin for fees and bridging. Far from being a replacement, RLUSD may reinforce XRP’s long-term utility and scarcity.

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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