Ripple’s stablecoin, Ripple USD (RLUSD), the company behind the XRP Cryptocurrency, will be launched “in weeks,” said Brad Garlinghouse, CEO of this company.
That statement of Garlinghouse was reported by CriptoNoticias on September 9, 2024, so the arrival of RLUSD to the cryptocurrency market would be increasingly closer.
1:1 parity of the RLUSD stablecoin with the US dollar
RLUSD would guarantee its peg to the US dollar through a backstop system based on cash deposits, short-term US Treasuries and other cash equivalent instruments.
Ripple advertisement its stablecoin at the beginning of April 2024 and, although the company did not explain where it will store the assets that will function as a reserve, in June 2024 notified his partnership with Standard Custodya digital asset custody company.
Standard Custody employs a segregated account security method for each client on the Blockchain. This means that each client’s funds would be separate and can be audited and tracked on the public network.
In addition, this company uses technology that includes end to end encryption and secure cryptographic keys. Unlike traditional cold storage, which can require manual operations, Standard Custody employs hardware and encryption to protect assets without human intervention. This security approach aims to minimize the risk of human error and insider attacks.
What they did state from Ripple is that it will carry out periodic audits by an external accounting firm, publishing reports that certify the existence and stability of its reserves. This is intended to help reassure users of this stablecoin, so that they can safely redeem RLUSD for real dollars whenever.
Multi-chain launch of Ripple stablecoin
In principle, the RLUSD stablecoin will be based on both the Ripple network, XRP Ledgera first layer blockchain, as in Ethereum-eth/” target=”_blank” rel=”noreferrer noopener”>Ethereum (ETH).
However, as reported CriptoNoticias, Ripple plans to expand its stablecoin to other networks. The choice to issue RLUSD on Ethereum, one of the most used ecosystems in decentralized finance (DeFi), could promote adoption and interoperability from RLUSD.
Being a token that uses the standard ERC-20RLUSD will be able to easily integrate with existing decentralized applications (dApps), decentralized exchanges (DEXs), financial lending platforms and DeFi protocols on the network co-founded by Vitalik Buterin. The ERC-20 standard is flexible enough to adapt to multiple use casessuch as utility tokens, governance tokens, stablecoins and representative assets. This has allowed its adoption in different industries, from finance to video games. RLUSD intends to take advantage of this feature to facilitate its adoption.
Despite the advantages, Ethereum is also known for its high transaction costs (gas fees), especially during times of congestion.
However, since Ripple they claim that its stablecoin will be able to be sent “globally in near real time with minimal fees and without the need for a bank account.”
How will RLUSD compete against USDT or USDC?
The current market for stablecoins that replicate the value of the dollar is dominated by the company’s cryptocurrencies TetherUSDT, and USDC, from the company Circle. These stablecoins are the two with the highest market capitalization, according to data from CoinMarketCap.
In a recent statement, Ripple indicated that RLUSD is not designed solely for individual users, but would focus on solving the needs of companies and institutions. This would include “cross-border and international payments, treasury management and other corporate processes.”
In addition, according to the advertisementRLUSD would especially target markets in regions such as APAC (Australasia, East Asia, South Asia and Southeast Asia), the European Union and Australia.
In this sense, USDT already has a strong positioning in Asian countries, such as China and South Korea, as well as in Latin America, Nigeria, Africa, and Turkey and Russia. For its part, Circle It has significant adoption in the United States and European countries.
Along with others 40 enabling licenses To issue RLUSD, Ripple plans to issue RLUSD under a New York State trust license following the acquisition of Standard Custody. These licenses are regulatory permits that companies must obtain to operate legally in the markets where they wish to offer their stablecoins. Thus, they guarantee that issuance and operation activities comply with regional financial laws and regulations.
This fiduciary license would imply a “more robust strategy” than issuance through a money transfer license (MTL) like those held by Circle and Tether, according to Ripple. Fiduciary licenses, such as those granted by the New York Department of Financial Services (NYDFS), require institutions to maintain stricter risk management practices and meet higher financial requirements.
According to New York Department of Financial Services (DFS) guidelines, stablecoin issuers, like Ripple, must maintain reserves equivalent to 100% of the nominal value of stablecoins in circulation.
These reserves must be composed of low-risk and highly liquid assets, which would ensure optimal management and transparent reservations.
Ripple stablecoin testing phase continues
In movements linked to the testing stage of your stablecoinNovember 22, 2024 Ripple issued 10,500,000 million RLUSD. Moments later, he distributed 10 million of those RLUSD tokens to 4 unknown addresses.
Ripple issued 10,500,000 RLUSD as part of the tests carried out on its stablecoin. Fountain: XRP Scan.
Days before, another operation linked to the Ripple tests was known in which burned more than 31,000,000 RLUSD.
Regarding the total issuance of RLUSD there are contradictions. For example, in ETH Eplorer The total supply is stated to be 420 billion. However, in Ether Scan that number is 34 million.
A post on the 47 million.
One factor that could impact the circulation of RLUSD could be the burning of these tokens carried out by the team working on testing the Ripple stablecoin.
On the other hand, on October 19, 2024, Ripple confirmed the cryptocurrency exchanges on which the RLUSD stablecoin will be listed, as notified CryptoNews. Among them will be Uphold, Bitstamp and Bitso.
So, given that CEO Ripple affirmed the early insertion of RLUSD and the constant testing done by the team behind this stablecoin, a new stablecoin would be inserted into the market to dispute the dominance of USDT and, secondly, of USDC.
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