Author: Marcel Deer, CoinTelegraph; Edited by: 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 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 USD 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.
On December 17, one week later, RLUSD officially launched and was listed on five crypto exchanges: Uphold, MoonPay, Archax, Bitso, and CoinMENA. Over time, its availability will expand, including well-known companies like Bullish, Bitcstamp, and Bitcoin Market.
RLUSD will be integrated into the Ripple payment network by 2025. The Ripple payment network will provide stablecoins for business clients needing global payments. It is expected to bring efficient and low-cost 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 RLUSD works similarly to other major stablecoins pegged to the US dollar, allowing individuals and institutions to deposit capital assets like USD to mint each new coin. The cryptocurrency can be traded on the Ethereum and XRP Ledger blockchains.
The technology and concept behind Ripple's new stablecoin aren't fundamentally new. It is a direct competitor to established players like USDT and USDC.
Collateral backing ensures price stability and avoids volatility issues present in some other cryptocurrencies. This reliability allows businesses and traders to transact without unpredictable price swings.
RLUSD can be used on the XRP Ledger and Ethereum blockchains. Thus, you can use it as a trading pair on exchanges or send and receive transactions with others.
Here are the differences between RLUSD, USDT, and USDC:
3. Advantages of RLUSD Stablecoin
Ripple Labs' RLUSD, with its strong advantages, aims to be a reliable, trustworthy, and efficient leader in the stablecoin space.
Value Stability: RLUSD is designed to maintain stable value, which is a feature of RLUSD that improves payment and transaction experiences for crypto users.
Regulatory Approval: RLUSD has received approval from the 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 specifically designed 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 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 USD at a 1:1 ratio.
(The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Labs in December 2020. The regulator alleged that Ripple sold XRP as an unregistered security. It wasn't until July 2023 that Ripple achieved a partial victory, with a judge ruling that XRP sold on exchanges was not a security, though 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 for RLUSD Stablecoin
RLUSD beta test results indicate 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 and at the lowest cost. This is useful in a globally interconnected economy.
On/Off Ramps: Cashing out with cryptocurrency can be a challenge. RLUSD provides useful on/off ramps for traders to enter and exit exchanges without volatility risk.
Daily Payments: Ripple Labs refers to the stablecoin as "digital cash," indicating that they intend for it to be used for smaller everyday payments. It's another convenient use for a fast and stable cryptocurrency.
Asset Tokenization: RLUSD enables you to tokenize real-world assets. Specifically, it allows institutions to collateralize for trading tokenized real-world assets (like government bonds, commodities, and securities).
DeFi: As RLUSD integrates into the Ethereum blockchain, it will provide a trusted stablecoin to be embedded in DeFi protocols. You shouldn't be surprised to see it used as collateral options for decentralized exchange (DEX) trading pairs or loan agreements.
5. Future Prospects of RLUSD Stablecoin
RLUSD has grand plans. Ripple expects its market cap to exceed $2 trillion by 2028.
Considering Bitcoin only reached a market cap of $2 trillion on November 11, this is ambitious. By December 2024—15 years after its launch—the leading stablecoin USDT had a cap of $138 billion at that time.
With regulatory approval, RLUSD is set to launch by the end of 2025, and it looks promising.
Since the testing of the XRP Ledger and Ethereum mainnets began in August, details about the release of the Ripple stablecoin have gradually emerged over the past few months. The differences between RLUSD and XRP are quite evident, and it has been confirmed that RLUSD is not a replacement for XRP, but rather complements Ripple's cross-border payment solutions.
Ripple has committed to auditing and transparency for its stablecoin, and will regularly conduct third-party audits of its collateral reserves alongside monthly financial reports. However, the details of who will carry out the auditing process have yet to be determined.
