Golden Encyclopedia | Understand Ripple Labs’ RLUSD stablecoin

Author: Marcel Deer, CoinTelegraph; Compiler: Bai Shui, Golden Finance

1. What is Ripple Labs’ RLUSD stablecoin?

RLUSD is a stablecoin developed by Ripple Labs, the organization behind the XRP cryptocurrency. RLUSD, or Ripple Labs USD, aims to provide a stable digital currency for trading and trading.

As a stablecoin pegged to the U.S. dollar, 1 RLUSD is equal to 1 U.S. dollar. Each RLUSD maintains a 1:1 peg. These collateral assets are either U.S. dollar deposits or cash equivalents.

On December 10, 2024, RLUSD received regulatory approval. The New York Department of Financial Services approved the XRP distributed ledger and a new stablecoin on the Ethereum blockchain.

A week later, on December 17, RLUSD was officially launched and listed on five crypto exchanges: Uphold, MoonPay, Archax, Bitso, and CoinMENA. Over time, Bitcoin's availability will expand to include well-known companies such as Bullish, Bitcstamp, and Bitcoin Market.

RLUSD will be included in the Ripple payment network in 2025. The Ripple payment network will provide stablecoins to corporate customers who require global payments. It is expected to lead to efficient and cheap cross-border transactions, especially for institutions.

Will RLUSD replace XRP? Ripple has confirmed that it is not a replacement for XRP. RLUSD is a form of digital cash.

2. How does the RLUSD stablecoin work?

RLUSD works similarly to other stablecoins that are primarily pegged to the U.S. dollar, allowing individuals and institutions to deposit capital assets such as U.S. dollars to mint each new coin. Cryptocurrencies can be traded on the Ethereum and XRP Ledger blockchains.

There’s nothing inherently new about the technology and concept of Ripple’s new stablecoin. It is a direct competitor to established players USDT and USDC.

Collateral backing ensures that prices remain stable and avoids the volatility issues that some other cryptocurrencies have. This reliability allows businesses and traders to trade away from unpredictable price fluctuations.

RLUSD is available on the XRP Ledger and Ethereum blockchains. Therefore, you can use it as a trading pair on an exchange or to send and receive trades with others.

Here are the differences between RLUSD and USDT and USDC:

3. Advantages of RLUSD stable currency

Ripple Labs' RLUSD relies on its strong advantages to make it reliable, trustworthy, and efficient, and is expected to become a leader in the stablecoin field.

• Value Stability: RLUSD aims to maintain a stable value, which is a feature of RLUSD that improves payments and transactions for crypto users.

• Regulatory Approval: RLUSD is approved by NYDFS and Ripple Labs as a developer and is a trustworthy crypto project. This gives it tremendous credibility upon launch.

• Institutional Payments Focus: The token is designed for institutional payments, so organizations can expect smooth, fast, and cost-effective global transactions.

• Broad Accessibility: Ripple is one of the biggest players in the blockchain world. They plan to launch RLUSD on multiple exchanges and will likely launch on every major cryptocurrency exchange soon.

• Multi-Blockchain Support: The new stablecoin will run on two blockchains – XRP Ledger and Ethereum. It can be used flexibly in a wide range of ecosystems.

• Fully Backed Reserve: Funding is guaranteed, with each RLUSD backed by an independent reserve of cash or cash equivalents. You can always convert RLUSD to USD at a 1:1 ratio.

(The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Labs in December 2020. The regulator accused Ripple of selling XRP as an unregistered security. It wasn’t until July 2023 that Ripple achieved a partial victory, when a judge ruled that the sale on the exchange XRP is not a security, although the institutional sale violated securities laws. The U.S. Securities and Exchange Commission (SEC) appealed the decision in October 2024, and the crypto world is still awaiting a final ruling.)

4. Use cases of RLUSD stable currency

RLUSD beta test results show that it is fast, reliable and cost-effective, making it useful for a variety of financial use cases, including payments, trading, DeFi and tokenization.

• RLUSD cross-border payment: Cross-border payment may be the biggest use of stable coins such as RLUSD. They enable you to send money instantly to anywhere in the world at minimal cost. Useful in a globally connected economy.

• In/Out Channels: Cashing out with cryptocurrencies can be a challenge. RLUSD provides useful entry/exit lanes for traders to enter and exit the exchange without the risk of volatility.

• Everyday payments: Ripple Lab refers to the stablecoin as “digital cash,” suggesting they want to use it for smaller, everyday payments. Another convenient use for a fast and stable cryptocurrency.

• Asset Tokenization: RLUSD enables you to tokenize real-world assets. Specifically, it allows institutions to provide collateral for trading real-world tokenized assets such as Treasuries, commodities, and securities.

• DeFi: As RLUSD is integrated into the Ethereum blockchain, it will provide a trustworthy stablecoin to integrate into DeFi protocols. You shouldn’t be surprised to see it used as a collateral option for decentralized exchange (DEX) trading pairs or lending protocols.

5. Future Prospects of RLUSD Stablecoin

RLUSD has big plans. Ripple expects its market capitalization to exceed $2 trillion by 2028.

This is ambitious considering Bitcoin only hit $2 trillion on November 11th. December 2024 – 15 years after launch. USDT, the world's leading stablecoin, had a cap of $138 billion at the time.

Subject to regulatory approval, RLUSD is set to launch in late 2025 and looks promising.

Details of the launch of Ripple’s stablecoin have been slowly revealed over the past few months, since testing began on the XRP Ledger and Ethereum mainnet in August. The differences between RLUSD and XRP are quite clear, and it has been confirmed that it is not a replacement for XRP, but will complement Ripple's cross-border payment solutions.

Ripple has committed to stablecoin audits and transparency, as well as regular third-party audits of collateral reserves alongside monthly financial reports. However, details of who will conduct the audit process have yet to be determined.