Pundits within the XRP community have discussed XRP’s potential to maintain its utility in payments despite the growing adoption of Ripple stablecoin, RLUSD.
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The recent launch of RLUSD and its integration into Ripple Payments have triggered concerns among XRP proponents. For context, Ripple launched RLUSD last December and subsequently integrated the stablecoin into its Ripple Payments infrastructure earlier this month.
The integration heightened concerns that RLUSD could replace XRP, which Ripple often leverages as a bridge currency. Interestingly, RLUSD has continued to grow, now boasting a market cap of $294 million as the 12th largest stablecoin.
XRP Still Holds Utility in Autobridging
Amid the discussions around its potential to replace XRP, prominent figures, including WrathofKahneman (WOK) and Daniel Keller, CTO of Eminence, an XRPL node operator, recently weighed in.
WOK, a respected figure in the XRP community, sought to address the concerns about RLUSD reducing XRP’s relevance. He argued that the conversation often lacks nuance. Notably, he admitted that stablecoins like RLUSD may appeal to users for direct transfers due to their price stability and guaranteed value.
However, WOK stressed that XRP has a function behind the scenes through a process called autobridging. When no direct trading path exists between RLUSD and another currency, such as the euro, the XRPL automatically uses XRP to carry out the transaction.
WOK explained that this mechanism ensures XRP remains a crucial liquidity provider, even for stablecoin transactions. He stressed that XRP and RLUSD serve complementary purposes, not competing ones, and urged the community to understand the XRPL’s mechanics.
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Argument Against Autobridging’s Practical Use Case
Daniel Keller responded but with a bit of skepticism around the concept of autobridging. Notably, he appreciated WOK’s commentary but argued that in practice, autobridging’s real-world impact is overstated.
Keller pointed out that users can often exchange assets directly, bypassing the need for XRP as an intermediary. He suggested that autobridging primarily applies to IOUs, tokens issued on the XRPL representing other assets but has limited practical use.
Instead, Keller advocated for an embrace of the emerging RLUSD, championing its strengths as a low-cost, reliable stablecoin backed by a trusted issuer. He cautioned against overcomplicating the narrative around XRP’s role, calling some claims exaggerated.
In response, WOK asked Keller to elaborate on his perspective around autobridging. To further clarify his view, Keller described a hypothetical scenario where two obscure tokens lack a direct trading pair.
In theory, XRP could bridge the gap for this scenario, allowing both parties to complete their trade easily through the XRPL’s decentralized exchange. The ledger would handle the complexity, using XRP’s liquidity to ensure smooth execution.
Keller admitted that this concept is brilliant but argued that it rarely plays out in practice. He noted that substantial trades typically occur in well-established markets with direct pairs, reducing the need for autobridging.
Can XRP Maintain Its Utility?
The Eminence CTO referenced the XRPL’s documentation, which states how autobridging boosts liquidity by using XRP as an intermediary when direct trades are less cost-effective.
For example, a trader swapping British pounds for Brazilian reais might benefit from XRP bridging the transaction if the direct market lacks depth. Yet, Keller maintained that such cases are edge scenarios, not the norm.
Meanwhile, Ripple CTO David Schwartz had earlier addressed these growing concerns. Last October, before the launch of RLUSD, he confirmed that XRP would still maintain its utility as the only asset for transaction payment on the XRPL. He also spotlighted its use case in autobridging. Ripple President Monica Long also assured in October 2024 that the firm would use XRP and RLUSD for payments complementarily.
DisClamier:
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