Ripple CTO Clarifies RLUSD Anomaly as XRP Price Jumps

News Fri, 17/01/2025 - 16:03 A A A Cover image via U.Today Read U.TODAY on Google News A ripple in the Ripple ecosystem caught attention this week as Ripple USD (RLUSD) temporarily broke its 1:1 peg with the U.S. dollar. The stablecoin, designed to maintain a consistent value, experienced an unexpected surge, briefly trading at $1.04 - a 4% increase that raised eyebrows across the XRP community. Advertisement The event did not go unnoticed, even if it was short-lived. Ripple's Chief Technology Officer David Schwartz , explained that this was because of the dynamics of the XRP/RLUSD market. He said that this unusual event probably happened because of a thin market structure, where a sudden increase in XRP's price can affect RLUSD valuations. Related Wed, 01/15/2025 - 05:58 What is RLUSD? Full Guide to Ripple's Stablecoin Vladislav Sopov HOT Stories SpaceX Bitcoin (BTC) Now Holding $700 Million: Details ‘We Are All Satoshi,’ Michael Saylor Says As Bitcoin Approaches $103,000 'Rich Dad Poor Dad' Author Reveals Big Asset Similar to Bitcoin: ‘Supply Low, Demand Up’ Bitcoin Reclaims $102K Amid Speculation About Strategic Reserve RLUSD, which was launched in December 2024, is Ripple's stablecoin initiative, which is backed 1:1 by reserves held. It operates on the XRP Ledger and Ethereum, and it is designed to provide liquidity and support for Ripple's financial ecosystem. Advertisement But the fact that it is linked to XRP's movements shows how tricky stablecoin behaviour can be in volatile environments. My bet is that it's looking at a thin XRP/RLUSD market only. When the price of XRP goes up, it will temporarily drag the price of RLUSD up with it until offers on that market can re-adjust. (And vice-versa if XRP's price goes down.) — David "JoelKatz" Schwartz (@JoelKatz) January 16, 2025 Solution? Meanwhile, the XRP Ledger community is getting ready to vote on creating an Automated Market Maker (AMM) pool for XRP/RLUSD. AMMs rely on liquidity pools to make decentralized trading possible, so they could be really important in dealing with problems like this. AMMs use something called an "algorithmic pricing model" to keep liquidity going, so they can stop prices from going up and down too quickly. Related Fri, 01/17/2025 - 06:05 XRP Surpasses Bitcoin in Trading Volume on Coinbase Alex Dovbnya But it is not a quick fix. The vote is set for two weeks from now, so the market will have to manage without this mechanism for the time being. But the proposed AMM pool is seen as a step toward making the stablecoin's performance better when things are changing rapidly. Disclaimer: The opinions expressed by our writers are their own and do not represent the views of U.Today. The financial and market information provided on U.Today is intended for informational purposes only. U.Today is not liable for any financial losses incurred while trading cryptocurrencies. Conduct your own research by contacting financial experts before making any investment decisions. We believe that all content is accurate as of the date of publication, but certain offers mentioned may no longer be available. #RLUSD #Ripple News #XRP #XRP News