Crypto enthusiast Luke Thomas recently shared a rumor that Ripple plans to custody its entire XRP in Escrow as the initial reserve for its underway stablecoin RLUSD.
1/ Speculation is circulating on Crypto Twitter (X) that @Ripple could custody its entire #XRP escrow to serve as the initial reserve for #RLUSD. Let me explain in simple terms what this means and why $XRP will witness a hyper galactic pump 🚀 if this were true. Thread🧵 below 👇
— Luke Thomas (@DEarthshaker) December 2, 2024
Current XRP Escrow Dynamics
Ripple currently holds approximately 38 billion XRP in escrow, locked until April 2027. Each month, one billion XRP is unlocked, with the company typically locking about 80% back into escrow while selling the remaining 20% on the secondary market.
In 2024 alone, Ripple sold 3 billion XRP, generating approximately $3.46 billion. The escrow mechanism ensures that Ripple’s large holdings do not flood the market, maintaining relative price stability for XRP.
Proposal: Using Escrow XRP for RLUSD Reserve
The proposal outlined by Thomas involves Ripple dedicating 30 billion XRP from the escrow as a reserve for RLUSD, which would serve as a new stable digital asset. Key components of the concept include:
Establishment of a Reserve:
Ripple would lock 30 billion XRP into a smart contract or similar mechanism, immobilizing the tokens as collateral. This would ensure the XRP could not be traded or liquidated, maintaining the reserve’s integrity.
Creation of RLUSD: RLUSD would be minted as a stablecoin-like asset, with its value pegged to the USD (e.g., 1 RLUSD = 1 USD). The locked XRP reserve would back this peg, providing stability and trust for RLUSD users.
Distribution and Utilization: Ripple could distribute RLUSD to its On-Demand Liquidity (ODL) partners, such as banks and payment providers, for cross-border transactions. This would promote faster and more cost-effective transfers across the XRP Ledger (XRPL).
Enhanced Working Capital for Ripple: By selling RLUSD to institutional partners, Ripple would receive fiat or other assets, bolstering its working capital. These funds could be utilized for operational expansion and innovative projects.
Potential Impacts on XRP and the XRPL
The implementation of such a strategy could bring several benefits:
Reduced XRP Supply: Locking 30 billion XRP would reduce its circulating supply, potentially driving up demand and market value.
Increased XRPL Liquidity: As ODL partners actively utilize RLUSD, demand for XRP’s ecosystem could grow, bolstering the utility of the XRPL.
Market Confidence: Establishing RLUSD as a collateral-backed asset would reinforce Ripple’s credibility and provide a strong use case for XRP in the financial ecosystem.
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Ripple as a Trillion Dollar Company
Thomas speculates that this approach could position Ripple as a trillion-dollar company by 2027 or 2028. He envisions a future where regulatory clarity fosters widespread cryptocurrency adoption, with traditional banks offering custodial, trading, and staking services.
This environment could drive new demographic groups, such as Gen X and Baby Boomers, into the cryptocurrency market via investment vehicles like ETFs.
Ripple’s potential RLUSD initiative exemplifies the innovative applications of blockchain technology and digital assets. If this speculation proves accurate, it could mark a transformative chapter for XRP and Ripple, reinforcing their roles in the evolving global financial landscape.
Disclaimer: This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are urged to do in-depth research before making any investment decisions. Any action taken by the reader is strictly at their own risk. Times Tabloid is not responsible for any financial losses.
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