Ripple’s chief technology officer, David Schwartz, has cautioned investors about potential price volatility for RLUSD, Ripple’s U.S. dollar-pegged stablecoin, as it prepares for launch.
In a December 15 post on X, Schwartz addressed concerns about RLUSD’s market debut, acknowledging the possibility of initial supply shortages that could drive its price above its intended $1 parity to the U.S. dollar.
An announcement for when RLUSD will be released to the market has yet to be provided. Ripple did not immediately respond to a request for comment.
In August, Ripple announced that it had started testing its new stablecoin on XRP Ledger (XRPL) and Ethereum mainnet. Ripple plans to utilize RLUSD to provide cross-border payment solutions to its global users.
Schwartz noted some pre-market bids valuing RLUSD as high as $1,244, attributing this to excitement from buyers seeking to claim “the honor” of purchasing the first units of the stablecoin.
“There actually is someone willing to pay $1,200/RLUSD for a tiny fraction of one RLUSD,” Schwartz wrote, referencing a Ripple wallet listing.
However, he said such inflated valuations would be short-lived, assuring that “the price will come back to very close to $1 as soon as supply stabilizes. If it doesn’t, something is very seriously wrong.”
Schwartz described the market forces at play, noting the role of arbitragers in stabilizing RLUSD’s price. Arbitrages are expected to quickly normalize RLUSD’s value by selling at inflated prices and buying at or below $1, straightening up supply and demand.
“Please don’t FOMO into a stablecoin! This is not an opportunity to get rich,” Schwartz added.
The warning comes as Ripple prepares to roll out RLUSD following its approval by the New York Department of Financial Services on December 11.
Schwartz concluded by reminding investors of a stablecoin’s main purpose: to have a “stable price.” While short-term price shifts are possible during launch, the stablecoin is designed to maintain its $1 peg.
Meanwhile, XRP surged to a seven-year high earlier this month, climbing to $2.74—the highest price since January 2018—marking a fivefold increase over the past 30 days.
XRP is down nearly 1% over the past day, trading at $2.41, according to Coingecko data.
Edited by Sebastian Sinclair
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https://decrypt.co/296710/ripple-cto-warns-of-fomo-as-rlusd-stablecoin-prepares-for-market-debut
2024-12-16 05:46:07
