Ripple CTO Explains Why Ripple Stablecoin RLUSD May Cost More Than $1

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As a seasoned researcher with years of experience in the cryptocurrency market, I have seen my fair share of market anomalies and hype surrounding new launches. The upcoming release of Ripple USD (RLUSD) is no exception, with the community buzzing about its potential impact on the XRP ecosystem.

As the year draws to a close, anticipation among crypto market participants, especially those within the XRP community, is growing increasingly intense regarding the launch of Ripple’s USD-backed stablecoin, RLUSD, by the San Francisco-based company of the same name. Earlier announcements from Ripple’s CEO have indicated a 2024 release date for this stablecoin, leaving only two weeks until the start of the new year, and thus, less time for its launch to take place.

On significant trading platforms and wallets within the Ripple ecosystem, Ripple USD (RLUSD) has been listed. However, it’s been observed that the pricing of this stablecoin exhibits some unusual behaviors. For instance, a supporter pointed out that the price for one RLUSD is set at 511 XRP, which translates to approximately $1,231.

David Schwartz, Ripple’s Chief Technology Officer, graciously offered insights into the current situation and the reason behind a stablecoin like RLUSD being priced at 123.1% above its actual value. To illustrate, Schwartz noted that during the early days of RLUSD and until market equilibrium is established, there might be a scarcity in supply. Additionally, there could be investors prepared to pay $1,200 for a minuscule fraction of one RLUSD.

The tools can reveal the maximum amount someone is prepared to spend, regardless of how minimal it may be. It could be that someone desires the privilege of being the initial buyer of Ripple USD on a Decentralized Exchange, according to Schwartz.

“Do not FOMO”

However, take comfort in the prediction made by Ripple’s CTO, who states that the price will revert back to $1 per RLUSD once supply equilibrium is achieved. Failure for this to occur could indicate a significant issue, as cautioned by Schwartz.

Furthermore, the designer of the XRPL expressed that if someone is prepared to invest a significant amount to obtain a minuscule amount of RLUSD ahead of others, they should not anticipate the price to remain above $1 once the market settles down, a scenario he expects to occur quite swiftly.

According to Schwartz’s explanation, the main purpose of a stablecoin is to maintain a consistent value, and while temporary price fluctuations due to insufficient supply or demand may occur, particularly during its initial release, these changes shouldn’t persist for long because arbitrageurs will swiftly adjust the market conditions.

The Chief Technology Officer at Ripple advises against feeling a sense of fear or missing out (FOMO) towards stable coins, as this is not a chance to amass wealth.

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2024-12-16 13:06