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As Ripple secures the much-anticipated regulatory approval to list its stablecoin RLUSD, industry experts are weighing in on how RLUSD’s launch could impact the price of XRP.
In a commentary on X, software engineer Vincent Van Code, and XRPL validator Vet offered contrasting perspectives on XRP’s price trajectory in light of RLUSD’s arrival. They highlighted both bullish possibilities and pragmatic limitations.
How RLUSD’s Launch Could Impact XRP Price
Van Code noted that the New York Department of Financial Services (NYDFS)’s approval of RLUSD has already raised XRP’s price from $1.90 to $2.35. However, he described this surge as a “speculative pump” rather than one based on solid fundamentals.
In his view, a true price breakout could occur once automated market maker (AMM) and liquidity pool (LP) features for RLUSD are activated on the XRP Ledger. He specifically argued that this development could significantly impact XRP, especially when users can earn up to 5% APY on-chain “without counterparty risk.”
Essentially, Van Code speculated that once RLUSD enters the DeFi ecosystems, it could attract substantial capital inflows into the XRP ecosystem. “Then, you will see serious money flowing into the XRPL,” he said.
Additionally, Van Code mentioned that exchanges will likely aim to capitalize on this opportunity by offering RLUSD staking. He predicted they would directly lock XRP on the XRPL and earn percentage returns. He also speculated that people may start swapping USDT for RLUSD and transferring it to self-custody wallets.
This, in turn, would allow users to leverage RLUSD to buy XRP and other assets through decentralized exchanges (DEXs). Van Code further suggested that purchasing LP tokens for a 5-6% return would be more advantageous than holding just XRP or RLUSD alone, as utilizing both assets together would offer greater returns.
He argued that this could increase XRP demand as liquidity dwindles across centralized exchanges, challenging price-suppressing bots and market makers. Van Code anticipates that this shift could unfold by February.
XRPL Validator Disagrees
However, XRPL validator Vet raised several concerns about the optimistic outlook proposed by Van Code, highlighting obstacles to this vision. First, Vet pointed out that RLUSD cannot currently participate in AMM pools on the XRPL.
He also noted that earning a specific yield in an AMM pool with RLUSD is not guaranteed and that returns are not assured. Additionally, Vet emphasized the risk of impermanent loss associated with AMMs.
Furthermore, he clarified that there will never be an AMM pool on the XRPL that eliminates counterparty risk.
Lastly, Vet highlighted that XRPL does not have a native staking feature and that staking on exchanges involves counterparty risk, making it not a unique offering.
Thats a highly speculative take imo.
1) RLUSD can't be put into an AMM for now
2) There is zero guarantee to earn any specific yield in an AMM pool with RLUSD or return.
3) There is always the AMMs impermanent loss risks.
4) There will never be an AMM pool on the XRPL with no…— Vet (@Vet_X0) December 10, 2024