Ripple Labs CTO David Schwartz Warns of Potential 'Supply Shortages' in the Early Days of Its US Dollar-Pegged Stablecoin

David Schwartz said there may be “supply shortages” in the early days of Ripple's US dollar-pegged stablecoin, but warned investors not to “FOMO.”

Here's a breakdown of the conversation, merging the content and aiming for a concise and engaging response.

There may be "supply shortages" and "huge bids" for small amounts of the new stablecoin being launched by Ripple, warned the firm’s chief technology officer, David Schwartz.

"If you're looking at the order book for the new stablecoin, you might notice something interesting: a huge bid for a tiny amount of the token. Someone is bidding $1,200/RLUSD for a small fraction of one RLUSD.

Schwartz said that the bid looked as though someone wanted "the honor" of buying the first bit of RLUSD to go to market.

"But 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. We're not planning any price stabilization measures other than quickly adding supply if the price moves materially from $1, and we'll do that quickly."

Once RLUSD is available, Ripple plans to use both RLUSD and XRP in its cross-border payments solution to serve its global customers, the company said in RLUSD's beta testing announcement.

While XRP will help add liquidity to RLUSD with its significant presence on exchanges, the stablecoin's price will also be stabilized by pairing to prevent depegging.

According to Ripple Labs CEO Brad Garlinghouse, RLUSD will focus primarily on large institutional players.