Author: Marcel Deer, CoinTelegraph; Translator: Bai Shui, Golden Finance
1. What is Ripple Labs' RLUSD stablecoin?
RLUSD is a stablecoin developed by Ripple Labs, the organization behind the XRP cryptocurrency. RLUSD, or Ripple Labs USD, aims to provide a stable digital currency for transactions and trades.
As a dollar-pegged stablecoin, 1 RLUSD equals 1 dollar. Each RLUSD maintains a 1:1 peg. These collateral assets are either U.S. dollar deposits or cash equivalents.
On December 10, 2024, RLUSD received regulatory approval. The New York Department of Financial Services approved the new stablecoin on the XRP distributed ledger and Ethereum blockchain.
One week later, on December 17, RLUSD was officially launched and listed on five crypto exchanges: Uphold, MoonPay, Archax, Bitso, and CoinMENA. Over time, availability will expand to include well-known companies like Bullish, Bitcstamp, and Bitcoin Market.
RLUSD will be integrated into the Ripple payment network in 2025. The Ripple payment network will provide stablecoins to corporate clients needing global payments. It is expected to facilitate efficient and low-cost cross-border transactions, especially for institutions.
Will RLUSD replace XRP? Ripple has confirmed it is not a substitute for XRP. RLUSD is a form of digital cash.
2. How Does the RLUSD Stablecoin Work?
The operation of RLUSD is similar to other major dollar-pegged stablecoins, allowing individuals and institutions to deposit capital assets like US dollars to mint each new coin. The cryptocurrency can be traded on the Ethereum and XRP Ledger blockchains.
The technology and concept of Ripple's new stablecoin are essentially not new. It is a direct competitor to established players like USDT and USDC.
Collateral backing ensures price stability and avoids some volatility issues present in other cryptocurrencies. This reliability allows businesses and traders to conduct transactions away from unpredictable price fluctuations.
RLUSD can be used on the XRP Ledger and Ethereum blockchains. Therefore, you can use it as a trading pair on exchanges or to send and receive transactions with others.
Here are the differences between RLUSD, USDT, and USDC:
3. Advantages of the RLUSD Stablecoin
With its strong advantages, Ripple Labs' RLUSD is expected to become a leader in the stablecoin space, as it is reliable, trustworthy, and efficient.
Value Stability: RLUSD is designed to maintain stable value, which is a feature that improves payment and trading for crypto users.
Regulatory Approval: RLUSD has received approval from NYDFS and Ripple Labs as the developer, making it a trustworthy crypto project. This gives it significant credibility upon launch.
Focus on Institutional Payments: The token is designed for institutional payments, allowing organizations to expect smooth, fast, and cost-effective global transactions.
Wide Accessibility: Ripple is one of the largest players in the blockchain world. They plan to launch RLUSD on multiple exchanges and are likely to roll it out on every major cryptocurrency exchange soon.
Multi-Blockchain Support: The new stablecoin will operate on two blockchains—XRP Ledger and Ethereum. It can be flexibly used across a wide ecosystem.
Fully Backed Reserves: Funds are secured, with each RLUSD backed by independent cash or cash-equivalent reserves. You can always exchange RLUSD for U.S. dollars at a 1:1 ratio.
(The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Labs in December 2020. The regulator accused Ripple of selling XRP as an unregistered security. It wasn't until July 2023 that Ripple achieved a partial victory, with the judge ruling that XRP sold on exchanges is not a security, although institutional sales violated securities laws. The SEC appealed this decision in October 2024, and the crypto world is still awaiting a final ruling.)
4. Use Cases of RLUSD Stablecoin
RLUSD beta test results indicate that it is fast, reliable, and cost-effective, making it suitable for various financial use cases, including payments, trading, DeFi, and tokenization.
Cross-Border Payments: Cross-border payments may be the largest use case for stablecoins like RLUSD. They enable you to send money anywhere in the world instantly and at minimal cost, which is useful in a globally interconnected economy.
On/Off Ramps: Cashing out cryptocurrency can be challenging. RLUSD provides useful on/off ramps for traders to enter and exit exchanges without volatility risk.
Everyday Payments: Ripple Labs refers to the stablecoin as 'digital cash,' indicating their intention to use it for smaller everyday payments. Another convenient use of fast and stable cryptocurrencies.
Asset Tokenization: RLUSD allows you to tokenize real-world assets. Specifically, it enables institutions to provide collateral for trading tokenized real-world assets such as government bonds, commodities, and securities.
DeFi: As RLUSD integrates into the Ethereum blockchain, it will provide a trustworthy stablecoin to incorporate into DeFi protocols. You shouldn't be surprised to see it used as a collateral option for decentralized exchange (DEX) trading pairs or lending protocols.
5. Future Outlook of the RLUSD Stablecoin
RLUSD has grand plans. Ripple expects its market capitalization to exceed $2 trillion by 2028.
Considering Bitcoin only reached $2 trillion on November 11, this is ambitious. By December 2024—15 years after its launch—the leading stablecoin USDT had a market cap of $138 billion.
With regulatory approval, RLUSD is set to launch at the end of 2025, and its prospects look bright.
Since the testing of the XRP Ledger and Ethereum mainnet began in August, details about the Ripple stablecoin's release have been slowly revealed over the past few months. The differences between RLUSD and XRP are quite apparent and it has been confirmed that it is not a replacement for XRP, but rather will complement Ripple's cross-border payment solutions.
Ripple has committed to auditing and transparency for its stablecoin and will regularly conduct third-party audits of collateral reserves alongside monthly financial reports. However, the details of who will carry out the audit process have not yet been determined.
