Stablecoins and XRP fundamental differences and market outlook

The definition and use of stablecoins

Stablecoins maintain a 1:1 value stability by being pegged to fiat currencies such as the US dollar, making them an important tool for reducing price volatility in the cryptocurrency market. They are widely used in scenarios such as trading hedging, DeFi collateral, and payment settlement, providing users with the convenience similar to “digital cash.”

The positioning and technical advantages of XRP

XRP is a digital payment tool created by the Ripple team, which is essentially not a stablecoin, aimed at optimizing global cross-border funds settlement. XRP has extremely fast transaction speeds (approximately 1500 transactions per second) and low fees, but its price fluctuates significantly with market sentiment and technological advancements, with no price stability guarantee.

The fundamental difference between XRP and stablecoins

The price of stablecoins usually fluctuates within a range of ±1%, supported by fiat assets, whereas XRP lacks such asset collateral, with daily fluctuations reaching 5%-10%, and in extreme cases even exceeding 30%. This makes XRP not possess the functional attributes of a stablecoin.

Future development

Ripple is actively expanding its business by launching the US dollar stablecoin RLUSD and planning to integrate the XRP Ledger with Ethereum. In addition, Ripple is applying to become a regulated crypto financial institution to help ensure the legality and compliance of XRP.

Strategy Recommendations

For those seeking to hedge against value fluctuations, stablecoins are more suitable; whereas XRP is actually a highly volatile clearing asset with significant medium to long-term value growth potential. Investors should fully understand the characteristics of both and rationally assess the risks and returns.