XRP’s RLUSD Risk: Is Decentralization Under Threat?

A prominent voice within the XRP community, known as “Stellar Expert,” has raised concerns about Ripple’s new stablecoin, RLUSD. According to Stellar Expert, RLUSD may pose a threat to XRP’s long-term viability rather than contributing to its growth.

In a series of posts on X, Stellar Expert theorized that RLUSD could potentially divert resources and attention away from XRP, ultimately making the original digital asset expendable. However, Ripple’s leadership has previously countered this perspective, asserting that XRP and RLUSD serve distinct, yet crucial, purposes within their ecosystem.

Despite assurances from Ripple executives, Stellar Expert recently argued that RLUSD’s cross-chain functionality could diminish the XRP Ledger’s importance. The expert highlighted that RLUSD is designed to operate on both Ethereum and the XRP Ledger.

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Will RLUSD Outgrow the XRP Ledger?

As a result, Stellar Expert questioned whether the stablecoin might flourish to a greater extent on alternative blockchain platforms like Ethereum or Solana, especially if major institutional players find their infrastructure more appealing.

Stellar Expert drew a parallel to Tether (USDT), which initially launched on Bitcoin’s Omni Layer but eventually gained significant traction on TRON due to its lower transaction fees and faster processing speeds. However, this comparison might not be directly applicable to the XRP Ledger, which is already known for its speed and cost-effectiveness.

According to Stellar Expert, if RLUSD achieves widespread adoption outside the XRP Ledger, XRP could potentially lose its primary purpose. The expert suggested that RLUSD could potentially handle many of the same functions as XRP, including facilitating cross-border transactions, currency conversions, and settlements.

3. What If RLUSD Finds Its Home Outside XRPL?
Ripple says RLUSD will live on multiple chains.
But DeFi is on Ethereum.
Speed is on Solana or even Tron.
Liquidity moves to where trading demand is.
If RLUSD succeeds outside XRP Ledger… what’s left for XRP?

— Stellar Expert (@StellarExpert) June 3, 2025

Stellar Expert believes RLUSD’s programmability, stability, and interoperability across multiple blockchain networks could make it the preferred token for banks and institutions within Ripple’s ecosystem, leaving XRP with a diminished role.

Furthermore, Stellar Expert cautioned XRP enthusiasts against assuming that all Ripple developments will automatically benefit XRP. While Ripple continues to expand its suite of tools and services, Stellar Expert believes that the company is now primarily focusing its efforts on RLUSD.

The expert suggests that if the stablecoin succeeds independently of XRP, XRP could gradually become less relevant, similar to the decline of Omni following Tether’s migration to other blockchains.

Ripple’s Perspective on XRP and RLUSD

Ripple’s leadership has previously addressed these concerns directly. Last October, Ripple President Monica Long clarified that RLUSD and XRP are complementary, not competitive. Long stated that the company uses both assets in its payment solutions, with each asset playing a role depending on specific client requirements.

Ripple CTO David Schwartz also echoed these sentiments last year, emphasizing that XRP maintains a unique function within the XRP Ledger. In addition to serving as a bridge currency for payments, XRP powers transaction processing and provides other native functionalities on the network.

Schwartz explained that while some payment clients prefer XRP for its liquidity and speed, others may opt for a stablecoin depending on their specific use case or regulatory considerations. Ripple actively utilizes both assets based on the individual needs of its clients.

Moreover, Stellar Expert’s assertion that Ethereum offers superior performance may not accurately reflect current conditions. The XRP Ledger generally offers faster and more affordable transaction processing than Ethereum.

While Ethereum remains a central hub for decentralized finance, it is often characterized by high transaction fees and slower processing speeds. TRON attracted USDT due to its faster and more cost-effective transactions, a characteristic that the XRP Ledger already possesses, giving it a potential advantage over Ethereum.

Currently, RLUSD primarily operates on the XRP Ledger. Because the network utilizes XRP for transaction fees, any growth in RLUSD activity actually increases XRP’s utility. Increased transaction volume means that more XRP is burned as part of the fee mechanism, potentially strengthening the asset over time rather than weakening it.