• Ripple CEO Brad Garlinghouse says XRP and RLUSD are “complementary, not competitive.”
  • XRP supports XRPL transaction fees, account reserves, and decentralized currency conversions.
  • RLUSD’s dollar peg makes it suitable for payroll, invoices, remittances, and treasury transfers.

Ripple CEO Brad Garlinghouse has rejected concerns that its dollar-backed stablecoin could displace XRP, saying the two assets address different payment needs. Responding to XRP Ledger validator Vet on November 3, Garlinghouse called XRP and RLUSD “complementary, not competitive.”

He separately identified other stablecoins as RLUSD’s competitors, emphasizing practical use cases rather than rivalry. The exchange followed questions about whether stablecoin settlement could reduce demand for the cryptocurrency.

Why Ripple’s XRP and RLUSD Serve Different Network Roles

XRP Ledger validator Vet distinguished the network’s native asset from an optional issued token. According to Vet, every funded account requires an XRP reserve, currently 1 XRP, while transaction fees are paid in XRP. These fees are permanently burned, reducing the cryptocurrency’s circulating supply.

They apply even when users transfer RLUSD, although the payment itself need not be converted into the native asset. Vet further acknowledged that holding RLUSD on the ledger requires a trust line with its issuer.

That arrangement adds a 0.2 XRP owner reserve, bringing the minimum for one trust line to 1.2 XRP. Unlike the stablecoin, the native cryptocurrency has no issuer able to freeze balances.

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How XRP Bridges Currencies Through XRPL Liquidity Routing

Beyond fees, XRP can act as an intermediary in the ledger’s decentralized exchange. Automated routing may select that path when it provides a better exchange rate than direct conversion.

This helps liquidity providers connect different currency markets without maintaining every possible trading pair. However, XRP fluctuates in market value. Its bridging function suits conversions where liquidity and exchange rates matter, rather than payments requiring a fixed dollar amount.

Why RLUSD Supports Stable Payments Without Replacing XRP

Unlike XRP, RLUSD targets $1 and is backed by cash and cash equivalents, with redemption arrangements at a one-to-one dollar ratio. That structure makes RLUSD more predictable for dollar-denominated payroll, invoices, remittances, and corporate treasury transfers than holding a volatile intermediary asset.

Moreover, Ripple can freeze issued stablecoin balances under controls, another distinction from the ledger’s native cryptocurrency. Still, RLUSD also operates on Ethereum. Its growth therefore does not necessarily increase activity on the XRP Ledger.

Even on that network, transaction fees consume little XRP. As a result, greater stablecoin usage alone cannot establish substantial overall demand for the cryptocurrency, as broader network activity and liquidity routing also matter.

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Related: Ripple Mints $110.57 Million in RLUSD as Binance Reopens XRP Withdrawals

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