Top XRPL Validator Explains the Difference Between XRP and RLUSD

The XRP Ledger supports multiple assets with distinct functions, but XRP and RLUSD occupy fundamentally different positions within its ecosystem.

XRPL Validator Vet has outlined the differences between the two assets, explaining how their design, level of control, and intended uses separate them beyond their price characteristics.

RLUSD is a dollar backed stablecoin issued by Ripple. As its issuer, Ripple operates under US regulations and retains the ability to freeze RLUSD. XRP, however, has no central issuer or jurisdiction governing it. No single entity can freeze the asset. Vet described XRP simply as a commodity.

What's the difference between XRP and stablecoins like RLUSD?

RLUSD is optional. XRP isn't.

RLUSD is a dollar-backed token issued by Ripple. As the issuer, Ripple has to follow US law and can freeze RLUSD. XRP has no issuer and no jurisdiction, and nobody can freeze it. It's a…

How the Ledger Treats Each Asset

XRP holds a unique position within the XRP Ledger’s structure. Every account requires an XRP reserve, while transaction fees are paid exclusively in XRP. RLUSD operates differently because users must establish a trust line before they can hold the stablecoin.

The decentralized exchange also gives XRP a distinct function. When users execute cross currency swaps, the XRPL automatically evaluates whether routing the transaction through XRP would provide a better exchange rate. For example, when exchanging USD for EUR, the system can assess XRP as an intermediary asset to determine whether it offers a more efficient route.

This feature gives XRP a role in the ledger’s liquidity infrastructure that other issued assets do not automatically receive.

Volatility and Different Use Cases

Vet also explained why XRP’s price volatility serves a different purpose from RLUSD’s stability. XRP has no backing asset determining its market price. Instead, its value fluctuates according to market demand and trading activity. Vet described this volatility as “exactly what attracts traders and investors.”

RLUSD serves a different audience by maintaining a value equivalent to $1. This makes it suitable for payroll, invoices, and other financial operations where price fluctuations could create uncertainty.

For transactions requiring a neutral asset outside the control of any government or central issuer, Vet considers XRP the appropriate option. He described it as “the only choice on the XRP Ledger” for this particular purpose.

He also explained the advantage for market makers. Using XRP to connect liquidity pools allows them to manage exposure to a single asset without taking on the additional counterparty risks associated with an individual token issuer.

Debate Over Demand for Native Assets

Vet responded by referencing the performance of native assets across the cryptocurrency market. “Native assets make up the majority of the total market cap of crypto,” he wrote, adding that demand for this asset category had increased.

Could XRP Support Institutional Settlement?

“If the DTCC wants to use the XRP Ledger they can do that. Whenever they want to. They don’t need to ask for permission,” he stated.

His response reflects the ledger’s open access structure, which allows institutions to determine independently whether its infrastructure meets their settlement requirements.