RLUSD stablecoin could diminish XRP's role as bridge asset, analyst argues

Since Ripple launched its RLUSD stablecoin, debate has emerged over whether XRP retains a necessary function on the XRP Ledger. Digital Ascension Group Chairman Jake Claver argues that RLUSD could render XRP redundant by assuming its role as a bridge asset.

On the XRP Ledger, XRP currently serves as an intermediary connecting tokenized assets that lack direct trading pairs. A user wishing to swap a tokenized money market fund for a yen-backed stablecoin, for example, would route the trade through XRP even though no direct market exists between the two assets. This bridging function becomes increasingly valuable as more tokenized assets enter the market.

Claver contends that RLUSD could fulfil this role because it is engineered for rapid digital settlement and maintains stability pegged to the US dollar. However, this raises a central question: can a dollar stablecoin effectively serve as a bridge for every transaction type?

The distinction hinges on use cases that do not involve dollars. A tokenized bond fund swapping into a tokenized commodity, for instance, would incur an additional step if forced to route through a dollar stablecoin, whereas XRP can function as a neutral bridge. Claver illustrates XRP's utility by comparing it to hub-and-spoke airport networks: without a central hub, 100 assets would require 4,950 direct trading pairs, but a single bridge asset reduces that to 100 connections.