RLUSD Launch Warning: Ripple CTO Urges Caution Amid Early Volatility
2024-12-17
As Ripple prepares to launch its new U.S. dollar-backed stablecoin, RLUSD, on December 17, Chief Technology Officer David Schwartz has issued a clear warning to early adopters about potential price volatility. Schwartz cautioned that supply shortages during RLUSD’s initial rollout may result in unusual and inflated prices before the market stabilizes.
In a post on social media platform X, Schwartz highlighted a striking example:
“There actually is someone willing to pay $1,200/RLUSD for a tiny fraction of one RLUSD.”
However, he reassured the community that such volatility would not persist:
“Rest assured, the price will come back to very close to $1 as soon as supply stabilizes. If it doesn’t, something is very seriously wrong.”
RLUSD: Launching on Key Platforms
Ripple’s RLUSD stablecoin will be initially available on major platforms such as Uphold, Bitso, MoonPay, Archax, and CoinMENA, with plans for expansion to additional exchanges, including Bullish, Bitstamp, Mercado Bitcoin, Independent Reserve, and Zero Hash.
Designed to maintain a 1:1 peg to the U.S. dollar, RLUSD will be fully backed by U.S. dollar deposits, U.S. government bonds, and cash equivalents. Ripple has emphasized transparency by committing to monthly third-party attestations from independent auditors to verify RLUSD’s reserves.
Ripple’s Advisory Board and Strategic Outlook
Ripple has also strengthened its regulatory and financial expertise by enlisting Raghuram Rajan, former Governor of the Reserve Bank of India, and Kenneth Montgomery, former First Vice President of the Federal Reserve Bank of Boston, to its advisory board. Their inclusion signals Ripple’s commitment to ensuring RLUSD’s stability and compliance with global standards.
Schwartz’s Advice: Avoid Speculative FOMO
David Schwartz urged caution against FOMO-driven speculation, particularly in the early days of RLUSD’s launch. He emphasized that RLUSD is not an investment opportunity but a stablecoin meant to deliver real utility within Ripple’s payment ecosystem.
“If you want to spend a lot of money to get a tiny bit of RLUSD before anyone else does, you can. But please don’t expect the price to stay over $1 once things stabilize.”
Schwartz reiterated that any temporary imbalances in supply and demand would correct quickly as market mechanisms take hold, ensuring the stablecoin’s price returns to parity with the U.S. dollar.
Impact on the XRP Ecosystem
The introduction of RLUSD is expected to enhance liquidity and utility across the XRP ecosystem. Ripple’s ability to integrate RLUSD into its payment solutions could unlock further adoption, potentially driving increased demand for XRP as a bridge asset.
Schwartz’s message serves as a reminder to users that RLUSD’s primary function is stability and utility, not speculative gains. Ripple’s structured approach, underpinned by transparency and regulatory oversight, aims to position RLUSD as a trusted stablecoin for global financial operations.
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FAQs
Why is Ripple CTO David Schwartz warning about RLUSD’s price volatility?
David Schwartz has cautioned that RLUSD’s initial supply shortages could create temporary price spikes due to speculative demand. He reassures that once supply stabilizes, RLUSD will return to its intended 1:1 peg with the U.S. dollar.
What is RLUSD, and how is its value backed?
RLUSD is Ripple’s U.S. dollar-backed stablecoin, fully collateralized by U.S. dollar deposits, government bonds, and cash equivalents. Monthly third-party audits will verify its reserves to ensure transparency and trust.
What role will RLUSD play in Ripple’s ecosystem?
RLUSD will provide stability and utility within Ripple’s payment ecosystem, enhancing cross-border transactions, liquidity, and interoperability, while also complementing XRP as a bridge asset for global financial solutions.
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Disclaimer: The content of this article does not constitute financial or investment advice.
