Ripple's Chief Technology Officer David Schwartz cautions investors against expecting gains from stablecoins as the company prepares to launch its new dollar-pegged cryptocurrency, Ripple USD (RLUSD).
Potential Supply Shortages Amid High Demand
In a recent post on X, Schwartz highlighted that RLUSD might face temporary supply shortages during its initial launch phase due to significant pre-market demand:
"There actually is someone willing to pay $1,200/RLUSD for a tiny fraction of one RLUSD…Maybe someone wants the ‘honor’ of buying the first bit of RLUSD on the DEX (decentralized exchange)."
He clarified that RLUSD’s price should stabilize close to $1 once supply meets demand:
"If you want to spend a lot of money to get a tiny bit of RLUSD before anyone else does, you can. But please don’t expect the price to stay over $1 once things stabilize, which I expect they will do very quickly."
Stablecoins: Stability Over Profit
Schwartz emphasized that stablecoins are designed for price consistency, not speculative gains:
"Short-term changes in prices due to shortages of supply or demand are certainly possible, especially around launch, but they shouldn’t remain for very long as arbitragers rapidly fix the market. Please don’t FOMO into a stablecoin! This is not an opportunity to get rich."
Key Takeaways About RLUSD
- Launch Date: Tuesday (post-final NYDFS approval).
- Purpose: A dollar-pegged stablecoin for transactions, not investment.
- Early Volatility: Possible due to limited initial supply.
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FAQs
1. Why might RLUSD’s price exceed $1 at launch?
- Temporary demand-supply imbalances could drive short-term price spikes.
2. How quickly will RLUSD stabilize to $1?
- Arbitrage trading is expected to correct imbalances "very quickly," per Schwartz.
3. Is RLUSD a good investment?
- No—stablecoins aim for price stability, not appreciation.
4. What regulatory approvals does RLUSD have?
- Final approval from the New York Department of Financial Services (NYDFS).
5. Where can RLUSD be traded initially?
- Decentralized exchanges (DEXs) at launch.
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