What to know:
- Evernorth says XRP acts as a routing layer for cross-asset swaps in on-chain finance systems.
- RLUSD stablecoin is positioned as a dollar-backed asset, not a universal trade bridge.
- Both assets are seen as complementary infrastructure for expanding tokenized markets.
RLUSD stablecoin is a dollar-pegged digital asset designed for stable value transfer, and Evernorth argues it plays a different role from XRP in on-chain finance systems.
Evernorth, in a blog post by Chief Business Officer Sagar Shah, compared market trading to a playground where kids struggle to directly swap snacks.
Similarly, fragmentation in the digital market becomes inefficient when there are no direct counterparts for the assets. XRP is said to be the neutral asset used for routing, where it acts as an intermediary between transactions, making real-time settlement possible.
Source: Evernorth
In this case, the RLUSD stablecoin serves as the stable value layer, whereas XRP facilitates cross-tokenization. For example, tokenized Treasuries can be exchanged for euro-denominated assets via XRP without requiring matching counterparties to transact.
The use of this approach increases liquidity and speeds up transactions due to the rapid proliferation of various assets.
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RLUSD stablecoin and Its Market Function
The RLUSD stablecoin is a currency pegged against dollars and uses reserve backing. Its main purpose is to maintain a constant value irrespective of the blockchain system being used.
It can be used in transactions where dollar settlement is required, though the RLUSD stablecoin cannot accommodate all types of asset transactions within the network.
When it comes to cross-asset trading markets, where tokens are traded against non-dollar assets, the RLUSD stablecoin becomes only one of the parts of the whole system and not necessarily the key bridging coin. According to the report, it would be very risky to use one issued stablecoin in such markets for all routings.
Lending, Escrow, and Infrastructure Use Cases
However, XRP does not only serve exchange purposes but is also used in lending transactions and in escrow services as well. In case of lending, the collateral should remain liquid, universal, and not dependent on the issuing party.
This makes XRP perfect for serving as collateral and maintaining balance within such transactions. The RLUSD stablecoin may be applied to payments within those ecosystems, but not as collateral.
The escrow system will hold the assets securely in a safe place until certain conditions are fulfilled. This is possible because there is no centralized issuer that is holding the funds.
Therefore, it is impossible to change the value of the locked assets until the specified conditions are fulfilled. RLUSD stablecoin assists in transaction settlement, but since it depends on issuer guidelines, it is not suitable for use as a neutral infrastructure asset.
According to Evernorth, as markets continue to tokenize, it is necessary to have two assets: one stable dollar asset like RLUSD and another neutral routing asset like XRP.
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