The connection between XRP and RLUSD

[Peter90]

XRP is the native token of the Ripple Network - or XRP Ledger - similar to ETH for the Ethereum blockchain or BTC for Bitcoin.
RLUSD is the native Stablecoin of the Ripple Network.

Many are wondering about the connection - both operational and price wise - between Ripple's XRP and Ripple's RLUSD.
Will RLUSD compete with XRP?

This explanation was quite helpful for me





So this is how I understand it: let's say A must send money to B, whereas A and B have different currencies.
If B want $ and A has $, they can use RLUSD.
In all other cases XRP is needed.

Now think of this scenario: A must send money to B in Japan, C in Mexico, D in Vietnam.
Normally A should buy Yen, Peso and Dong.
With XRP instead, A only needs XRP.
The conversion of XRP into the currency of B takes place on B's side i.e. XRP gets converted in Yen in Japan, in Peso in Mexico and in Dong in Vietnam.

Since buying foreign currency entails costs, using XRP is cheaper for A.
Besides, sending XRP is also cheaper (and faster) because transactions on Ripple Network are cheaper and faster than international transactions through banks.

[Azharul]

We know that XRP is also the native token of Ripple Network. We also know that XRP is one of the best profitable currency in crypto currency market. I believe that gradually XRP will be increasing in best position in cryptocurrency market. But if we follow in crypto currency market and another coin of RLUSD, we can see that it also the best profitable coin in crypto currency market. I think that gradually RLUSD will reach best position. But if we follow in Blockchain ETF, we can see that there are similar position in this twice crypto.

[hugeblack]

Sounds exciting but with a trading volume of around $136.66K and a market cap of less than $1B it will be hard to use widely or trust the RLUSD stablecoin pair especially after what happened with UST.


Regarding to backed by 1:1 for US dollar, saying that a segregated reserve of cash and cash equivalents and redeemable means that it is not backed by a 1:1 ratio of cash.
https://ripple.com/solutions/stablecoin/

Ripple USD (RLUSD) is designed to maintain a constant value of one US dollar. Natively issued on XRP Ledger and Ethereum blockchains, Ripple USD is fully backed by a segregated reserve of cash and cash equivalents and redeemable 1:1 for US dollars. *Availability of RLUSD is dependent on jurisdiction.

[Peter90]

Regarding to backed by 1:1 for US dollar, saying that a segregated reserve of cash and cash equivalents and redeemable means that it is not backed by a 1:1 ratio of cash.

That's correct, but currently no stablecoin is backed by a 1:1 ratio of cash.
Not even USD1
Probably it was naive to think that being pegged to the $ means being backed by $ (though it was what most USDT users thought...)
Cash doesn't allow to make profits.
USDT had never expanded to what it is now if they had put the money of USDT holders only in cash.


Anyway, back to Ripple.
I have always understood that the Ripple Network was designed for institutional clients - preeminently banks.
Now I'm confused...

[hugeblack]

Anyway, back to Ripple.
I have always understood that the Ripple Network was designed for institutional clients - preeminently banks.
Now I'm confused...

The reason may be the last pumping, I always thought that XRP tends to be a stable price, close to $ 1 and very low fees but what happened in recent weeks suggests that they want to be an alternative to TON/TRON.

[bitmover]

Sounds exciting but with a trading volume of around $136.66K and a market cap of less than $1B it will be hard to use widely or trust the RLUSD stablecoin pair especially after what happened with UST.

But UST was algorithm, there were no reserves of cash/dollar, it is a different concept.

I think that if big exchanges adopt RLUSD, or even banks, it can be adopted really fast.

In the end, exchanges has a strong decision in which stablecoin is going to grow.

[hugeblack]

But UST was algorithm, there were no reserves of cash/dollar, it is a different concept.

What I mean is the concept of new stablecoins in the bull market, almost many investors are planning to sell bitcoin in the coming months and a significant percentage that will buy well known stablecoins, because what happened with UST will make it difficult to trust in any new stablecoin.

[Peter90]

 

[Rruchi man]

because what happened with UST will make it difficult to trust in any new stablecoin.

RLUSD will be easier to gain trust because they promise better compliance with regulations and transparency concerning their reserves, etc.

[Peter90]

The reason may be the last pumping, I always thought that XRP tends to be a stable price, close to $ 1 and very low fees but what happened in recent weeks suggests that they want to be an alternative to TON/TRON.

XRP Market Cap is 6x Tron Market Cap.
It's not Ripple that want to be an alternative to Tron, it's Tron - if any - that would like to be an alternative to Ripple.
Don't forget, Justin Sun, the Founder of TRON DAO, worked for Ripple.


XRP was never meant to be a stablecoin.
It can be used as a bridge for transcurrency transactions because of the speed of the Ripple network: it takes only second for a transaction to take place, so even with a non-stable currency the volatility risk is limited.
Besides, Ripple clients are preeminently institutions, organisations, corporations, gov agencies... etc., i.e. entities sophisticated enough to be able to hedge and protect themselves from volatility in such transactions.

[erus]

Regarding to backed by 1:1 for US dollar, saying that a segregated reserve of cash and cash equivalents and redeemable means that it is not backed by a 1:1 ratio of cash.

That's correct, but currently no stablecoin is backed by a 1:1 ratio of cash.
Not even USD1
Probably it was naive to think that being pegged to the $ means being backed by $ (though it was what most USDT users thought...)
Cash doesn't allow to make profits.
USDT had never expanded to what it is now if they had put the money of USDT holders only in cash.


Anyway, back to Ripple.
I have always understood that the Ripple Network was designed for institutional clients - preeminently banks.
Now I'm confused...

If RLUSD is not backed by real 1:1 Fiat USD, I seem a bit hesitant to buy or hold this RLUSD coin. You also said that USD1 is not fully backed by real USD.
You are confused, especially me who is new to crypto lately. But it seems that RLUSD is designed to stabilize Ripple coins or support the price of Ripple coins which fluctuate in price. This is just my opinion.

[MrSpasybo]

XRP is the native token of the Ripple Network - or XRP Ledger - similar to ETH for the Ethereum blockchain or BTC for Bitcoin.
RLUSD is the native Stablecoin of the Ripple Network.

Many are wondering about the connection - both operational and price wise - between Ripple's XRP and Ripple's RLUSD.
Will RLUSD compete with XRP?

This explanation was quite helpful for me

---

So this is how I understand it: let's say A must send money to B, whereas A and B have different currencies.
If B want $ and A has $, they can use RLUSD.
In all other cases XRP is needed.

Now think of this scenario: A must send money to B in Japan, C in Mexico, D in Vietnam.
Normally A should buy Yen, Peso and Dong.
With XRP instead, A only needs XRP.
The conversion of XRP into the currency of B takes place on B's side i.e. XRP gets converted in Yen in Japan, in Peso in Mexico and in Dong in Vietnam.

Since buying foreign currency entails costs, using XRP is cheaper for A.
Besides, sending XRP is also cheaper (and faster) because transactions on Ripple Network are cheaper and faster than international transactions through banks.

Thank @Peter90 for the explanation and visual example.

For me, XRP plays a role similar to ETH, and RLUSD plays a role similar to ERC-20 USDT. They are not substitutes for each other and RLUSD does not have a negative impact on the role and value of XRP in the XRP Ledger ecosystem.

Usually, if users just want to transfer money quickly, XRP is the simplest choice. In case users prefer USD, they can convert their assets to RLUSD to move and hold in the long term. It seems that RLUSD was created to meet the needs from a small group of users, and then become a driving force for the development of DeFi on the XRP Ledger in the future.

I haven't used the XRP Ledger yet, I'm just holding XRP in my account and waiting for its price to increase thanks to the momentum from Ripple marketing and the development of the XRP Ledger ecosystem ^^

[bitterguy28]

I think that if big exchanges adopt RLUSD, or even banks, it can be adopted really fast.

centralized banks are not big fans of cryptocurrency and decentralization in general and i do not really see rlusd right now to be the number one pick by most banks since there have been already more well known and well used stablecoins like usdt although its restriction in europe may be a hindrance to further adoption

In the end, exchanges has a strong decision in which stablecoin is going to grow.

if i were to bet on whatever stablecoin a centralized bank will make use of, i will bet that they will choose none for i am sure they will focus with cbdcs instead and create their own stablecoins