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Ripple CTO Explains XRP Burn Mechanics Behind Ripple USD Stablecoin
In a recent conversation, Ripple’s Chief Technology Officer (CTO), David Schwartz, shed light on the XRP burn mechanics behind the upcoming Ripple USD (RLUSD) stablecoin. The announcement sent shockwaves through the crypto community, with many questioning the sudden and massive 580 million XRP transfer.
However, according to Schwartz, these reductions in XRP’s total supply are a crucial component of the RLUSD ecosystem’s functionality. By burning a significant portion of the existing XRP supply, Ripple aims to ensure that the stablecoin’s value is stabilized and remains tied to the US dollar (USD) peg.
The CTO explained that this mechanism will allow RLUSD to maintain its 1:1 USD peg, even in scenarios where there might be fluctuations in global markets or other cryptocurrencies. The burned XRP is essentially removed from circulation, reducing the overall supply of XRP and thus stabilizing the value of RLUSD.
In essence, Ripple’s strategy revolves around utilizing XRP burns as a mechanism to balance the RLUSD supply, ensuring that the stablecoin remains pegged to the USD at all times. This move could potentially have significant implications for the XRP market and its overall dynamics.
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Source: u.today
