Ripple’s stablecoin, RLUSD, reached a market capitalization of just $1.56 billion, up from just $132 million at this time last year. By any measure, the stablecoin has been a huge success since its launch in December 2024.
This is great news for Ripple, the company behind XRP, but it’s a problem for cryptocurrency investors.
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I can see why XRP holders might be happy to accept RLUSD. Ripple growth is Ripple growth, right? More products should mean a bigger ecosystem, and one that increasingly lifts all boats.
But I think this situation is wrong.
XRP’s core value proposition has always been to act as a “bridge asset,” providing liquidity in Ripple’s payment product — formerly known as Liquidity on Demand (ODL). Before RLUSD, when a bank in France sent dollars from the US to euros, Ripple converted the dollars to XRP and then back to euros. XRP was the middle stage – and it still can be, but so can RLUSD.
And as a dollar-sized stablecoin, it is exactly that — stable — and stability is what banks are after. They avoid dealing with volatile assets as much as possible.
This makes RLUSD irrelevant for many financial institutions that want to use Ripple’s liquidity product, and any institutions that choose RLUSD are less likely to opt for XRP.
Ripple understands that banks want stability and has worked hard to promote RLUSD as the first bridge asset. The company spent $200 million to acquire stablecoin payments company RAIL, and its website now clearly features “integrating stablecoin payments into your business” — not “use XRP for faster transactions.” Ripple clearly seems to be building its future around a stablecoin infrastructure while XRP has been neglected.
I’ve been saying for a while now that Bell’s fundamental thesis — that adoption of Ripple’s technology will create demand for XRP — has already been flawed. The fact is that many banks do not need Ripple’s liquidity features and only use its messaging technology, which is not included in XRP.
But at least there was demand pressure from smaller institutions that wanted liquidity. It is now being discounted by Ripple itself. The more RLUSD is accepted, the less XRP is needed.
