Ripple CTO David Schwartz has advised potential investors against making panic-driven purchases of the Ripple USD (RLUSD) stablecoin prior to its official launch. In a recent post on X (formerly Twitter), Schwartz highlighted the possibility of an initial supply shortage, leading to price fluctuations for the dollar-pegged asset. This warning comes in light of reports that pre-launch offers for RLUSD have reached as high as 511 XRP, equivalent to $1,200. Early buyers may end up paying inflated prices for the novelty of owning the first RLUSD tokens.
Schwartz pointed out that some buyers could be willing to pay a premium for the perceived “honor” of securing the earliest trades on Ripple’s decentralized exchange. Despite the frenzy, he reassured investors that the stablecoin’s price would stabilize near $1, as expected from a well-functioning stable asset. He cautioned against expecting long-term gains from paying excessive prices, emphasizing that a stablecoin’s primary role is to maintain parity with its fiat counterpart, such as the US dollar. Fear-driven purchases, according to Schwartz, should be avoided as RLUSD is not intended as a speculative asset.
Ripple aims for RLUSD to complement its XRP token by improving institutional transactions and cross-border payments. However, the stablecoin market is already crowded with established players like Tether’s USDT and Circle’s USDC, posing stiff competition for RLUSD upon its launch. The recent approval of RLUSD by the New York State Department of Financial Services (NYDFS) following unexpected delays in the application process has provided a green light for Ripple to proceed with the release. Ripple CEO Brad Garlinghouse has confirmed that the stablecoin is on schedule for its debut, though an exact release date has not been disclosed.
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In conclusion, David Schwartz’s caution against panic buying of the Ripple USD stablecoin serves as a timely reminder for investors to exercise prudence and rationality in their purchase decisions. While early adoption may hold appeal for some, it is crucial to avoid being swayed by fear or hype when considering investments in stablecoins like RLUSD. With the stablecoin market becoming increasingly competitive, Ripple will need to navigate challenges and demonstrate the value proposition of RLUSD to stand out among existing players like Tether and Circle. As the stablecoin prepares for its official launch, investors should approach this opportunity with careful consideration and an understanding of the risks involved in the cryptocurrency market.
