Ripple CTO: Stablecoin Won't Hurt XRP's Utility as Bridge Currency

In response to growing concerns about the impact of Ripple's upcoming stablecoin on XRP's role as a bridge currency for ODL, CTO David Schwartz clarified that Ripple remains committed to promoting XRP adoption where it provides optimal solutions. Schwartz emphasizes the importance of encouraging payment solutions that can settle with XRP efficiently and removing any barriers that hinder its use as the most optimal settlement option.

Ripple CTO Assuages Concerns Regarding Stablecoin's Impact on XRP Utility

San Francisco, April 25, 2024

In response to inquiries raised by the XRP community, Ripple's Chief Technology Officer (CTO), David Schwartz, has provided clarification regarding the potential implications of the company's forthcoming stablecoin on the usage of XRP as a bridge currency for its On-Demand Liquidity (ODL) service.

Background and Concerns

Ripple's recent announcement of plans to launch a stablecoin on the XRP Ledger (XRPL) and Ethereum networks has elicited mixed reactions. While the general mood has been positive, some speculate that the move could signal a shift away from XRP.

These concerns stem from the potential impact of the stablecoin on XRP's utility as a bridge currency for ODL. ODL enables cross-border payments by leveraging XRP for liquidity provision, bridging different currencies and payment networks.

Ripple CTO's Response

In response to concerns raised by XRP community members, Schwartz emphasized Ripple's commitment to fostering the adoption of payment solutions that efficiently utilize XRP. He highlighted that the company's focus is on encouraging the use of payment software that can settle transactions with XRP, thereby ensuring that the optimal solution is utilized where appropriate.

"It would be kind of silly to try to get people to use a solution where it's inferior," Schwartz remarked.

Schwartz further clarified that Ripple's objective is to remove barriers that hinder the use of XRP in situations where it offers superior advantages.

Factors Influencing XRP vs. Stablecoin Choice

Despite Schwartz's assurances, some community members remained uncertain about the circumstances under which XRP would continue to be the preferred choice for ODL settlements. They speculated that the stablecoin could potentially outperform XRP in specific scenarios.

Schwartz addressed this concern, explaining that the suitability of XRP versus the stablecoin depends on various factors, including the duration for which the 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," Schwartz stated.

In such cases, factors such as liquidity and the availability of on/off ramps could ultimately influence the choice between XRP and the stablecoin.

Ripple's Commitment to XRP

Schwartz's comments underscore Ripple's unwavering commitment to advancing XRP's adoption where it provides the most optimal user experience and economic benefits. The company remains dedicated to ensuring that users have access to the most efficient payment solutions available.

While the launch of the stablecoin presents an additional option for certain use cases, XRP continues to play a pivotal role in Ripple's overall vision of seamless and cost-effective cross-border payments.