XRPL Validator Vet Unveils the Interplay Between Ripple's XRP and the RLUSD Stablecoin

XRPL validator Vet recently shared crucial insights regarding the role of Ripple's backed digital asset XRP and the RLUSD stablecoin.

XRPL validator Vet recently shared some key insights into the relationship between Ripple’s XRP and the RLUSD stablecoin. According to Vet, XRP and RLUSD work together to improve trading efficiency and liquidity in the decentralized network.

XRP and RLUSD have different characteristics and play complementary roles in facilitating seamless transactions in the XRPL ecosystem. One key difference, as highlighted by Vet, is that XRP is neutral and has no counterparty risk, while RLUSD has Ripple as its counterparty.

XRP can act as a bridge asset to enhance liquidity between RLUSD and other tokens, thanks to its neutral nature, which reduces counterparty concerns for market participants.

The stablecoin RLUSD is pegged 1:1 to the US dollar and is fully backed by Ripple, as stated in a previous CNF report. Within the XRPL, RLUSD serves as a stable medium of exchange, aiding users in evading the inherent volatility of the crypto market.

While RLUSD is dependent on Ripple, XRP remains an independent asset that benefits from intrinsic liquidity. Together, the assets complement each other by catering to different needs within the XRPL.

Due to its neutrality and liquidity, XRP can be used as a bridge asset for transactions involving RLUSD and other tokens. This complements the assets' functions and benefits market makers, as XRP's neutral nature reduces counterparty risk and can facilitate liquidity across diverse assets.

However, Vet later clarified that direct stablecoin-to-stablecoin transactions, such as RLUSD to RLCAD, are still an option. According to him, the XRPL algorithm automatically selects the optimal conversion offers.

Vet also mentioned that the RLUSD stablecoin will aid Ripple in integrating its payment system with the XRPL.

As the stablecoin gains approval from the NYDFS, the crypto community awaits its transformative role in the XRPL. Earlier, CNF reported that the New York Department of Financial Services (NYDFS) has officially approved Ripple Labs' application for its RLUSD stablecoin.

The approval is part of Ripple's strategy to expand its footprint in the stablecoin market, which is expected to reach 2 trillion dollars by 2028. To ensure broad access to RLUSD, Ripple has partnered with major exchanges like Uphold, Bitstamp, and Bitso.

RLUSD aims to revolutionize conventional cross-border transactions by providing innovative solutions. Ripple intends to utilize RLUSD and XRP to address current challenges, such as the need for pre-funded nostro accounts in the banking sector.

Throughout XRPL, XRP is crucial for maintaining efficiency due to its asset class. Despite the consensus that XRP's neutral and liquid asset role will keep it relevant in most RLUSD conversion scenarios, some highly liquid trading pairs may completely avoid XRP.

According to a CNF report, experts anticipate that the introduction of RLUSD will increase XRP utilization and drive up its price. At the time of writing, XRP was trading at $2.42, showing a 3.7% increase over the last 24 hours.