Ripple USD Stablecoin: Challenges and Opportunities
Ripple’s USD stablecoin (RLUSD) is almost ready to launch. While details are still under wraps, the launch is anticipated to happen within weeks, not months. The stablecoin aims to fill the void left by Circle USDC’s depegging from the US dollar.
Bitget Research Chief Analyst Ryan Lee has shared some insights on the potential challenges and opportunities for RLUSD.
Use Cases
Lee anticipates that Ripple will issue RLUSD on both the XRP Ledger (XRPL) and Ethereum blockchains. However, the XRPL’s current state of development could lead to questions about its practicality and may limit its potential demand.
Additionally, Lee echoes the Bank of England’s findings that stablecoin payments are still not widely used beyond the crypto ecosystem. This trend could pose a challenge to RLUSD’s growth.
Market Dominance
The market dominance of Tether USDT and Circle USDC presents a significant hurdle for RLUSD. Even MakerDAO’s DAI stablecoin, despite being the third-largest, faces challenges maintaining adoption. This has prompted MakerDAO to explore other ventures to sustain its ecosystem.
USDT boasts a market cap of over $118 billion, while USDC sits at nearly $35 billion. DAI, with a market cap exceeding $5 billion, is still far behind.
Lee predicts that RLUSD’s experience could mirror PayPal’s PYUSD stablecoin. PYUSD, despite its association with a fintech powerhouse, struggled to gain traction.
Even Kamino, Solana’s lending market, which offered a 20% annual percentage yield (APY) for a time, failed to generate lasting momentum for PYUSD.
Regulatory Compliance
Ripple emphasizes that RLUSD is compliant with US regulations, giving it an advantage for institutional investors and corporate users with strict compliance requirements. However, Ripple’s past legal troubles with the US Securities and Exchange Commission (SEC) could create uncertainty surrounding the stablecoin’s future.
Cross-Border Payments
One of Ripple’s core businesses is cross-border payments. RLUSD could seamlessly integrate with existing Ripple payment solutions, potentially leading to faster and cheaper cross-border transactions. This could attract users.
Overall, the success of RLUSD will depend on factors such as its adoption rate, its ability to compete with established stablecoins, and the regulatory landscape surrounding stablecoins.
