Ripple CTO David Schwartz recently addressed concerns regarding the potential impact of Ripple’s upcoming stablecoin on the use of XRP as a bridge currency for ODL.
Recall that the San Francisco-based blockchain payments firm recently announced plans to launch a new stablecoin on the XRP Ledger (XRPL) and Ethereum networks. While the general reaction to this announcement has been bullish, some suggest Ripple could be pivoting away from XRP.
Growing Concerns and Speculations
These mixed sentiments have led to discussions around the potential impact of the stablecoin on XRP’s utility. The latest discourse ignited when an XRP community member sought clarification on X about the role of the new stablecoin in the payment model regarding ODL (now Ripple Payments).
He questioned whether the introduction of the stablecoin would render XRP obsolete in facilitating cross-border transactions. Essentially, this XRP investor was curious if Ripple was signaling a shift away from XRP as the preferred bridge asset for international payments.
Interestingly, attorney Fred Rispoli suggested earlier this week that Ripple’s primary aim for launching the stablecoin is to use it as a bridge currency for ODL partners in the U.S.
In addition, citing recently released legal documents in the Ripple vs. SEC lawsuit, on-chain researcher Anderson asserted that Ripple could be looking to use its stablecoin for U.S.-based ODL customers, not XRP. This move could be due to the legal concerns some U.S.-based institutions have about XRP despite its legal clarity.
Ripple CTO Provides Clarification
In response to the latest questions on the stablecoin potentially replacing XRP, Schwartz emphasized the importance of encouraging the adoption of payment solutions that can settle with XRP efficiently.
The idea is to get people using payment software that *can* settle with XRP. Then there’s no reason for them not to settle with XRP where it works best. It would be kind of silly to try to get people to use a solution where it’s inferior. 1/2
— David “JoelKatz” Schwartz (@JoelKatz) April 24, 2024
He highlighted that the goal is to remove any barriers hindering the use of XRP where it offers the most optimal solution. Schwartz stressed that it would be counterproductive to promote a payment method that is inferior to using XRP for settlement. Notably, a report earlier this year showed that 50% of ODL transactions leveraged XRP.
Schwartz’s statement underscores Ripple’s commitment to promoting the adoption of XRP where it provides the best user experience and economic benefits. The company aims to ensure that users have access to the most efficient payment solutions available.
However, concerns persisted among some community members, with one expressing uncertainty about the circumstances in which XRP would be the optimal choice for settlement. This member speculated that the stablecoin might outperform XRP in certain scenarios.
Schwartz addressed this concern by pointing out that the suitability of XRP versus the stablecoin depends on various factors, such as the duration for which a bridge asset is held during transactions.
For cases where you don’t hold the intermediary asset for very long, the stablecoin doesn’t really have any inherent advantage. It will likely come down to issues like liquidity and availability of on/off ramps.
— David “JoelKatz” Schwartz (@JoelKatz) April 24, 2024
He suggested that in cases where the bridge asset is not held for an extended period, the stablecoin may not necessarily offer inherent advantages over XRP. Instead, factors like liquidity and the availability of on/off ramps could influence the choice between the two assets.
Read the full article here
