Ripple CTO, David Schwartz, recently addressed concerns surrounding the potential impact of Ripple’s upcoming stablecoin on the use of XRP as a bridge currency for ODL (On-Demand Liquidity). Ripple, a blockchain payments firm based in San Francisco, recently announced plans to launch a new stablecoin on the XRP Ledger (XRPL) and Ethereum networks. While the initial reaction to this announcement has been positive, some speculate that Ripple may be shifting away from XRP.
These mixed sentiments have sparked discussions about how the stablecoin will affect the utility of XRP. The discussion began when an XRP community member sought clarification on the role of the new stablecoin in the payment model for ODL. They questioned whether the introduction of the stablecoin would make XRP obsolete in facilitating cross-border transactions. Essentially, this investor was curious if Ripple was indicating a move away from XRP as the preferred bridge asset for international payments.
Interestingly, attorney Fred Rispoli suggested earlier this week that Ripple’s primary goal in launching the stablecoin is to use it as a bridge currency for ODL partners in the United States. Additionally, on-chain researcher Anderson, citing legal documents in the Ripple vs. SEC lawsuit, claimed that Ripple may be planning to use its stablecoin for U.S.-based ODL customers instead of XRP. This potential shift could be due to legal concerns that some U.S.-based institutions have about XRP, despite its legal clarity.
In response to these concerns about the stablecoin potentially replacing XRP, Schwartz emphasized the importance of encouraging the adoption of payment solutions that can settle with XRP efficiently. He highlighted that the goal is to remove any barriers that impede the use of XRP where it offers the most optimal solution. Schwartz stressed that promoting a payment method inferior to using XRP for settlement would be counterproductive. Notably, a report earlier this year showed that 50% of ODL transactions utilized XRP.
Schwartz’s statement underscores Ripple’s commitment to promoting the adoption of XRP where it provides the best user experience and economic benefits. The company aims to ensure that users have access to the most efficient payment solutions available. However, concerns persist among some community members, with one expressing uncertainty about the circumstances in which XRP would be the optimal choice for settlement. This member speculated that the stablecoin might outperform XRP in certain scenarios.
Schwartz addressed this concern by pointing out that the suitability of XRP versus the stablecoin depends on various factors, such as the duration for which a bridge asset is held during transactions. He suggested that in cases where the bridge asset is not held for an extended period, the stablecoin may not necessarily offer inherent advantages over XRP. Instead, factors like liquidity and the availability of on/off ramps could influence the choice between the two assets.
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