Clear Reasons Why Ripple's Stablecoin RLUSD is Not an XRP Killer

▲ Ripple (XRP) ©Go Dasol

An expert analysis has emerged, directly refuting market concerns that Ripple's ambitious dollar-pegged stablecoin, RLUSD, would threaten the position of XRP (Ripple).

According to crypto media outlet Bitcoinist on May 21 (local time), Sagar Shah, Chief Business Officer (CBO) of financial platform Evernorth, stated via an official blog that RLUSD can never replace XRP, and that the two assets are designed to perform entirely different roles within the on-chain financial system. According to the report, RLUSD serves as a high-quality digital dollar, while XRP functions as a neutral routing asset that mediates payments, liquidity provision, and collateral between different assets within the XRP Ledger (XRPL) ecosystem.

CBO Shah clearly explained the difference between the two assets by likening it to a situation where children exchange snacks on a school playground. As the variety of assets that can be directly traded increases, the number of trading pairs grows exponentially, maximizing inefficiency. In this scenario, XRP acts as an 'exchange agent' that holds a little bit of every type of snack and facilitates bartering in between. For example, when tokenized US Treasury bonds are exchanged for Euro stablecoins, an intermediary process occurs in real-time in the backend, where the Treasury bonds are converted to XRP and then exchanged back into Euro stablecoins, though unseen by the trader. RLUSD, on the other hand, is merely a single asset, like a 'juice box,' a specific snack used when one side of the transaction desires dollars, and thus cannot be a universal routing asset.

Evernorth cited three specific reasons why RLUSD cannot be an XRP killer: issuer risk, lack of neutrality, and market structural limitations. First, stablecoins issued by a specific company holding collateral face the risk of issuer-related issues such as regulatory or banking problems, posing a critical design flaw for use as an essential routing asset for the entire system. Second, regulated stablecoins like RLUSD must comply with controls such as sanctions, court orders, or blacklists, making them unsuitable for the neutral routing role of a permissionless ledger where anyone worldwide can participate without an intermediary. Currently, due to its protocol structure, XRP possesses perfect neutrality, meaning no third party can freeze it or block payments.

The third and final reason is the market structure in the era of asset tokenization. Creating individual liquidity pools or automated market makers (AMMs) for hundreds of tokenized asset pairs is nearly impossible in terms of capital efficiency, meaning a few large assets must ultimately serve as bridges. XRP is the most liquid asset within the XRPL, and the protocol's pathfinding function is designed to route through XRP by default, inevitably concentrating market maker capital. Furthermore, thanks to its structural advantage of having no issuer and its stability from operating continuously for many years, it maintains its status as an irreplaceable bridge asset.

Consequently, as on-chain finance advances, the demand for high-quality digital dollar RLUSD and the utility of neutral routing asset XRP are both expected to grow in their respective domains. Evernorth clearly articulated that the functions of the two assets are strictly separate, and amidst this technical debate, the XRP price has maintained a solid trend, holding at around $1.37 at the time of reporting.

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