Advantages of the Stablecoin Ripple USD (RLUSD) and Its Impact on XRP

Bittime - Ripple is preparing to launch its Ripple USD (RLUSD) stablecoin. This stablecoin is expected to have a positive influence on the XRP ecosystem.

Read this article to find out the advantages of the RLUSD stablecoin and its impact on XRP.

Advantages of Stablecoin RLUSD: Reducing XRP Transaction Volatility

One of the advantages of the Ripple USD (RLUSD) stablecoin is that it can reduce exchange rate volatility in XRP transactions. 

This stablecoin is designed as a stable intermediary in purchasing XRP so that the risk of price fluctuations can be minimized.

For example, large institutions wishing to purchase XRP can use the RLUSD stablecoin to carry out transactions without worrying about sudden changes in the value of XRP. 

When institutions such as banks make large purchases using RLUSD, the price of XRP can be pushed up due to the withdrawal of XRP at a lower price from the order book on the exchange.

Read Also: Stablecoin Ripple USD (RLUSD): Definition and Functions

Advantages of Stablecoin RLUSD: Scaling XRP Liquidity and Base Price

Apart from reducing volatility, the advantage of the Ripple USD (RLUSD) stablecoin is that it can increase XRP market liquidity. 

As demand increases through large purchases, the supply of XRP available in the market may decrease. This opens up the opportunity for a higher floor price to be created, which could strengthen XRP's position in the market.

For example, if an institution deposits $1 billion of RLUSD stablecoin to buy XRP, the purchase will drive the price of XRP lower on exchanges.  

As supply decreases, the price of XRP could increase creating greater stability.

Advantages of Stablecoin RLUSD: Attraction for Institutional Adoption

The advantages of the Ripple USD (RLUSD) stablecoin are attractive to institutions looking for cross-border payment solutions. 

By reducing volatility risks and providing an easier path for large transactions, the RLUSD stablecoin could attract more institutional adoption of XRP.

PIncreased institutional interest in XRP could have a positive long-term impact, both on the price and global acceptance of XRP. With RLUSD, Ripple can also strengthen its competitiveness in the cross-border payments market.

Read Also: When Will Ripple's RLUSD Launch? This is the leaked information

Stablecoin RLUSD FAQs

What is RLUSD Stablecoin and its Functions?

The RLUSD stablecoin is a stablecoin developed by Ripple with a value pegged 1:1 to the US dollar. This stablecoin functions for price stability, cross-border payments and transactions on the XRP Ledger and Ethereum blockchain ecosystems.

What are the advantages of the RLUSD stablecoin compared to other stablecoins?

The RLUSD stablecoin offers full collateral with reserves in the form of US dollar deposits, short-term government securities, and cash equivalent assets. 

When will RLUSD Launch?

The launch of the RLUSD stablecoin was initially expected on December 4, 2024, but was postponed indefinitely. Ripple also warned to be careful of tokens claiming to be RLUSD before the official announcement was made. 

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Reference

Vignesh S.G., XRP News: Ripple’s RLUSD Stablecoin Could Boost XRP Price Stability, accessible on December 9, 2024.

Author: IPR