In his latest YouTube video analysis, Adam Cochran, partner at Cinneamhain Ventures (CEHV), an activist venture capital firm, described Ripple’s newly launched stablecoin, RLUSD, as a “Trojan horse” poised to transform both decentralized finance ( DeFi) and traditional. Banking sectors.
Why Ripple’s RLUSD is a ‘Trojan Horse’
Cochran stressed the strategic importance of RLUSD, saying: “Ripple has quietly dropped a bomb and no one is really talking about it but it could dramatically revolutionize Ripple’s position in the market.” He explained that while the cryptocurrency community remains focused on XRP price movements and upcoming programmability upgrades, RLUSD represents a fundamental shift in the XRP Ledger (XRPL) ecosystem.
RLUSD distinguishes itself from other stablecoins by adhering to strict regulatory standards. “RLUSD is not just another version of USDC; this is more about the original Paxos stablecoin that is regulated by NYDFS, issued by a custodian, and backed by safe fiat assets,” Cochran highlighted.
The stablecoin is backed exclusively by real US cash equivalents held in US banks registered with regulatory bodies and subject to regular audits. This regulatory compliance ensures that RLUSD meets stringent cash transfer licenses, including a Virtual Asset Service Provider (VASP) license, making it for use by exchanges and banks in the EU.
Unlike other stablecoins like Tether (USDT), RLUSD is set to be issued on both the XRP Ledger and the Ethereum blockchain. “Ripple is making sure it takes ownership of it itself and can provide more value to the ecosystem,” Cochran noted.
Cochran posits that RLUSD is integral to unlocking the vast multi-trillion dollar forex markets on the blockchain without the need for advanced technological upgrades. “This stablecoin will unleash the power of real-world asset issuers (RWA), FX issuers, token issuers, and other programs to be able to price their assets in USD on native AMM,” he noted.
The introduction of RLUSD is expected to facilitate pricing of USD assets directly on XRPL’s Automated Market Maker (AMM), thus attracting institutional trading and forex settlement activities. “Ripple can start taking advantage of the yield that comes in and put it back into the XRP ecosystem,” Cochran explained. He points out that a stablecoin could boost on-chain liquidity, which is currently limited to opaque exchange balances:
“Sophisticated participants don’t want to have an AMM traded against Ripple as a base currency. They want to be able to price their assets in USD, and until the launch of RLUSD this was not possible. This stablecoin will unleash the power of RWA assets, and FX issuers , coin issuers, and other software (…) to allow Ripple to bring much of their overall liquidity across the chain.”
Ripple has long targeted institutional customers, including banks, financial institutions and forex traders. Cochran emphasized the importance of regulatory compliance, saying: “If Ripple can get approval for its MA compliance and offering in the EU and bring this stablecoin to diverse markets, they have a great opportunity to have these providers integrate the Ripple network by offering it on-return chain and share that revenue.”
Furthermore, the company’s strategic focus on programmability through upcoming features such as Hooks and an Ethereum Virtual Machine (EVM) sidechain is expected to enhance RLUSD’s utility. “Ripple still really needs hooks and its EVM sidechain to perform well, and get the programmability to be able to offer more sophisticated DeFi products,” Cochran said.
The global stablecoin market, currently dominated by Tether (USDT) and US Dollar Coin (USDC), represents a huge opportunity for RLUSD, especially within the European Union where regulatory frameworks are strict. Cochran estimated that “if Ripple issued the same amount of stablecoins as Tether does today, it would be looking at a roughly $5 billion per year potential yield gain.”
Cochran also pointed out the competitive advantage RLUSD could provide for Ripple, saying: “These are asset issuers who are interested in RWA issuance, FX settlement and exchange (…) which is something no one else in the DeFi space has the experience or interest in.” Or the tools that can be provided.”
Cochran concluded his analysis by emphasizing Ripple’s strategic path, saying: “Ripple has a huge potential path ahead if it continues to execute the vision the way it wants to.”
At press time, XRP was trading at $2.51.
Featured image from YouTube, chart from TradingView.com