Countdown to the listing of Ripple stablecoin RLUSD: Ripple will invest heavily in subsidies and start a customer grabbing war?

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Brad Garlinghouse, CEO of Ripple Labs, confirmed at Korea Blockchain Week this week that Ripple’s USD-pegged stablecoin is about to be released.

We will definitely launch soon, weeks, not months. It is called Ripple USD. RLUSD is minted within this framework.

RLUSD follows the Ethereum ERC-20 standard

Garlinghouse said the token plan was developed after USD Coin (USDC), the second-largest stablecoin with a market capitalization of $34 billion, lost its peg to the U.S. dollar in March 2023. Ripple first disclosed its stablecoin plans in April, saying the token would be "100% backed by U.S. dollar deposits, short-term U.S. Treasury securities and other cash equivalents."

RLUSD has begun testing with corporate partners in early August and plans to first deploy on Ripple's XRP Ledger and Ethereum blockchains, following Ethereum's ERC-20 standard.

Possible challenges for RLUSD

In this regard, Bitget Research chief analyst Ryan Lee accepted an interview with "Blockzeit" to analyze the challenges RLUSD may face.

1. Limited use of stablecoin payments

Lee said that Ripple plans to launch stablecoins on XRP Ledger, but the network is not yet mature, which may raise questions about its practical application and thus suppress market demand.

Additionally, Lee pointed out that the use of stablecoin payments outside of the crypto ecosystem is still quite limited, citing Bank of England findings , a trend that could limit the growth potential of Ripple’s stablecoin.

2. USDT and USDC still dominate

Another key factor that may limit demand for RLUSD is the dominance of Tether USDT and Circle USDC in the stablecoin market.

According to data from The Block, USDT accounts for 70% of the total stablecoin market supply, with a market value of more than $118 billion, while USDC accounts for 21%, with a market value of nearly $35 billion. Although MakerDAO's DAI is the third-ranked stablecoin on CoinMarketCap, its market capitalization is just over $5 billion.

Will you spend a lot of money to grab market share?

On the other hand, since the differences between various USD stablecoins are not large, subsidy policies are often adopted to attract users after the release of new projects.

For example, the stablecoin PYUSD issued by PayPal has more than doubled in size in the past three months. The biggest reason is inseparable from the generous subsidies provided by cooperation with major DeF protocols on Solana (Jupiter, ORCA, Wormhole, Drift Protocol, Kamino Finance...). In mid-August, providing PYUSD liquidity on Kamino has an APY income of 17.64%, and Marginfi can provide PYUSD with an APY income of 18.58%...

Therefore, will Ripple adopt the same policy in the future, and will users take advantage of it? You can continue to observe.

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Disclaimer: The content above is only the author's opinion which does not represent any position of Followin, and is not intended as, and shall not be understood or construed as, investment advice from Followin.
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