Cointelegraph reports that David Schwartz, Ripple’s Chief Technology Officer, has issued a warning regarding the potential “supply constraints” and volatility that may arise during the launch of Ripple’s US Dollar-pegged stablecoin, RippleUSD (RLUSD).
In a post dated December 15, Schwartz emphasized that the stablecoin may experience substantial price fluctuations at first, despite its intention to maintain a 1:1 parity with the US dollar. A number of substantial transactions for the token are responsible for this volatility.
Schwartz observed that the value of the stablecoin, which has not yet been disclosed, was being artificially inflated by certain pre-market bids. He responded to a post on a Ripple wallet named Xaman that displayed 1 RLUSD valued at approximately 511 XRP, which is equivalent to $1,244 at current prices. Schwartz observed that an individual appeared to be willing to pay $1,200 per RLUSD for a small fraction, implying that the “honour” of purchasing the first RLUSD to become available was a more significant factor. Nevertheless, he reassured investors that the price would stabilise at approximately $1 once the supply normalises. He also cautioned against the “fear of missing out” (FOMO) and emphasised that this is not a ‘get-rich-quick’ opportunity.
Brad Garlinghouse, the CEO of Ripple, announced on December 11 that the New York Department of Financial Services had granted final sanction to RLUSD. The official Ripple account indicated that the stablecoin would be launched shortly. As stated in the beta testing announcement for RLUSD, Ripple plans to integrate RLUSD with XRP in its cross-border payment solutions to serve global customers once it is available. According to Ripple President Monica Long, the purpose of RLUSD is to serve as a “complementary and additive” asset to XRP.
Ripple views RLUSD as advantageous for XRP, as the two will be coupled to increase liquidity and stabilise the stablecoin’s price, thereby preventing depegging. Brad Garlinghouse, the CEO of Ripple Labs, has stated that the primary objective of RLUSD is to target large institutional participants. The company intends to capitalise on the substantial availability of XRP on exchanges to bolster RLUSD’s liquidity.
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