Prominent XRP community figure Crypto Eri sought clarification from Ripple executive David Schwartz about whether the XRP Ripple holds are part of the “Cash Equivalent” backing the upcoming stablecoin.
Crypto Eri’s inquiry came after Eric van Miltenburg, Ripple’s SVP for Strategic Initiative, suggested the Ripple stablecoin would be advantageous to the XRP Ledger (XRPL). Miltenburg expressed this view during an interview when asked to respond to the concern that Ripple’s stablecoin could kill XRP.
The concerns suggest the stablecoin could diminish Ripple’s extensive reliance on XRP for cross-border payment transactions. However, Miltenburg argued otherwise by pointing out that the stablecoin is launching on XRPL. He noted the move “will be ultimately good for the [XRP] ecosystem.”
The Ripple SVP went on to draw parallels with the additional utility stablecoins bring to other blockchain networks like Polygon. Specifically, Miltenburg highlighted that stablecoins help propel the volume of total value locked (TVL) on-chain and improve trust in other blockchains.
Inquiry about XRP’s Place in Ripple’s “Cash Equivalent”
However, Crypto Eri finds a disconnect with the TVL comparison. She sought clarification from Ripple’s CTO, David Schwartz, on what assets would be locked on XRPL.
Recall that Ripple revealed during its announcement that the coming stablecoin will be backed by U.S. dollar deposits, U.S. government bonds, and cash equivalents.
In parallel, Eri asked Schwartz whether the XRP Ripple holds would be included in the “cash equivalent” that backs the stablecoin. Where XRP is absent, she questioned the rationale behind Miltenburg’s comparison of stablecoins often leading to increased TVL on other chains.
Ripple CTO Clarifies
In response, Ripple’s CTO clarified that there is presently no native mechanism to “lock up” assets on XRPL. He suggested that Miltenburg’s reference was likely regarding how the presence of high-quality stablecoins spurred activities on other blockchains, as evidenced by their rise in locked value.
Currently, there’s not really any native way to “lock up” assets on XRPL. What I think Eric was talking about was how having high-quality stablecoins has driven usage of other blockchains as measured by the increase in value locked.
On XRPL, you’d expect to see people using…
— David “JoelKatz” Schwartz (@JoelKatz) April 25, 2024
Furthermore, Schwartz explained that stablecoins are anticipated to serve various purposes on XRPL: as a means for individuals to hold funds without exposure to crypto volatility, and as assets for automated market makers (AMMs) alongside XRP. Also, he noted people could see the stablecoin as a method to enhance the overall usability and functionality of XRPL.
In essence, Schwartz believed Miltenburg’s underlying point was that stablecoins enhance the appeal and utility of blockchains in general, not necessarily in the context of TVL alone.
