Author: Marcel Deer, CoinTelegraph; Translator: Bai Shui, Jinse 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 trading.
As a stablecoin pegged to the US dollar, 1 RLUSD equals 1 dollar. Each RLUSD maintains a 1:1 peg. These collateral assets are either US 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 officially launched and was listed on five crypto exchanges: Uphold, MoonPay, Archax, Bitso, and CoinMENA. Over time, Bitcoin's availability will expand, including 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 for corporate clients needing global payments. It is expected to bring efficient and inexpensive cross-border transactions, especially for institutions.
Will RLUSD replace XRP? Ripple has confirmed that it is not a replacement for XRP. RLUSD is a form of digital cash.
2. How does the RLUSD stablecoin work?
The way RLUSD works is similar to other major US dollar-pegged stablecoins, allowing individuals and institutions to deposit capital assets like US dollars to mint each new coin. Cryptocurrencies can be traded on the Ethereum and XRP Ledger blockchains.
The technology and concept behind Ripple's new stablecoin are essentially nothing new. It is a direct competitor to established players like USDT and USDC.
Collateral support ensures price stability and avoids some of the volatility issues present in other cryptocurrencies. This reliability allows businesses and traders to operate away from unpredictable price swings.
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 and USDT and USDC:
3. Advantages of the RLUSD stablecoin
With strong advantages, Ripple Labs' RLUSD is reliable, trustworthy, and efficient, and is expected to become a leader in the stablecoin space.
Value stability: RLUSD is designed to maintain stable value, which is a feature that improves payment and trading experiences 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 specifically for institutional payments, so organizations can 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 it is likely to be available 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 an independent reserve of cash or cash equivalents. You can always exchange RLUSD for dollars at a 1:1 ratio.
(The U.S. Securities and Exchange Commission (SEC) sued Ripple Labs in December 2020. The regulator accused Ripple of selling XRP as an unregistered security. Until July 2023, Ripple achieved a partial victory when a judge ruled 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 waiting for a final ruling.)
4. Use Cases of the RLUSD Stablecoin
The 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 biggest use case for stablecoins like RLUSD. They allow you to send money anywhere in the world instantly at the lowest cost. Useful in a globally interconnected economy.
Entry/Exit channels: Cashing out with cryptocurrency can be a challenge. RLUSD provides a useful entry/exit channel for traders to enter and exit exchanges without volatility risk.
Everyday payments: Ripple Labs refers to stablecoins as 'digital cash,' indicating that they hope to use it for smaller everyday payments. Another convenient use for 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 offer a reliable stablecoin to integrate into DeFi protocols. You should not be surprised to see it used as a trading pair on decentralized exchanges (DEX) or as a collateral option in loan agreements.
5. Future Outlook for the RLUSD Stablecoin
RLUSD has grand plans. Ripple expects its market value to exceed $2 trillion by 2028.
Considering that Bitcoin only reached $2 trillion on November 11, this is ambitious. December 2024—15 years after launch. The global leading stablecoin USDT had a cap of $138 billion at that time.
With regulatory approval, RLUSD is set to launch at the end of 2025, and the outlook seems promising.
Since testing began on the XRP Ledger and Ethereum mainnet in August, details about the release of Ripple's stablecoin have been slowly revealed over the past few months. The differences between RLUSD and XRP are quite evident, and it has been confirmed that it is not a replacement for XRP but will complement Ripple's cross-border payment solutions.
Ripple has committed to stablecoin audits and transparency, regularly conducting third-party audits of collateral reserves alongside monthly financial reports. However, the details of who will carry out the auditing process remain undecided.
