Since April 1, more than $100 million in Ripple USD (RLUSD) has been issued, marking some of the highest issuance levels in the past few months as interest in this emerging stablecoin surges.
This week saw the issuance of a $50 million tranche of RLUSD on Tuesday, followed by another $50 million on Wednesday. This uptick in issuance coincides with Ripple integrating the stablecoin into its official payment solutions, with payment providers such as BKK Forex and iSend reportedly utilizing it.
Experts in the field anticipate that RLUSD will further alter the dynamics of the cryptocurrency market, as established players like Tether (USDT) and USD Coin (USDC) might face competition from Ripple’s offering.
Decentralized financial (DeFi) platforms on the XRP Ledger are expected to be noteworthy players as RLUSD gains popularity across various interfaces, potentially increasing demand for the XRP token.
RLUSD, a stablecoin pegged 1:1 to the U.S. dollar, operates on both the XRP Ledger and the Ethereum blockchain, fully backed by U.S. dollar deposits, short-term U.S. Treasury securities, and cash equivalents.
To preserve its peg, RLUSD employs a 1:1 reserve system in which each token corresponds to an equal fiat value.
Users can create RLUSD by depositing dollars with authorized partners who issue the tokens, or by burning RLUSD to redeem cash. The market’s arbitrage activity helps maintain its price stability: if RLUSD is valued below $1, traders purchase it for redemption at face value, thereby increasing its demand; conversely, if it exceeds $1, additional tokens can be minted, raising supply.
The security features of RLUSD enhance its appeal among institutional clients. A recent amendment to the XRP Ledger introduced a “clawback” function, allowing issuers to recover or “claw back” certain tokens, including RLUSD, from users’ wallets under specific circumstances.
This mechanism is typically utilized for regulatory purposes, asset recovery in cases of fraud, and situations where tokens are sent to unintended addresses.