Sagar Shah, chief business officer at Evernorth, dismissed the idea that Ripple’s dollar-backed stablecoin RLUSD could replace XRP, arguing that the two assets are designed for different roles in on-chain finance. In the May 20 blog mailRLUSD can serve as a high-quality digital dollar, while XRP remains the neutral routing asset for cross-asset settlement, liquidity and collateral on the XRP ledger, Shah said.
The argument addresses a recurring question in the XRP community and among market watchers: If RLUSD is able to move dollars on-chain and settle quickly, what function still remains for XRP?
Shah’s answer is that RLUSD and XRP are not competing for the same function. He wrote that RLUSD represents the leg of the dollar in transactions. XRP is an asset that can be placed between markets when two parties naturally do not want to trade the same asset pair.
Will RLUSD replace XRP?
To explain this difference, Shah used the analogy of trading on the playground, where children try to exchange snacks at recess. Direct trading becomes ineffective when one child has a goldfish, another has fruit snacks, and the one with the fruit snacks wants the pretzels instead of the goldfish. As the number of snacks grows, the number of potential trading pairs expands rapidly. With ten different snacks, there are 45 possible pairings, Shah noted. With 100 snacks, there are approximately 5,000.
He said this reflects the problem real markets face with the proliferation of token assets.
“The likelihood that two specific children will want to snack on each other at the exact same moment is getting smaller and smaller,” Shah wrote. “This is the same problem that real markets face. The more assets there are, the more difficult live trading becomes.”
By analogy, the solution is the “swap child,” the participant who holds a little of each snack and allows everyone else to trade through them. This is the role XRP plays in the XRP Ledger, Shah said. A trader might see a simple swap from tokenized Treasuries to the Euro stablecoin, but the actual path could be XRP tokenized Treasuries to… Euro stablecoin.
“XRP’s move is invisible to the trader,” Shah wrote. “They see” the Treasury bill in, the euro stablecoin out. “But the XRP in the middle is what makes trade possible, instantly, without anyone having to find a specific buyer on the other side.
Shah framed RLUSD as “something completely different.” It is a stable currency Designed to be valued at $1 and backed by reserves maintained by its source. This makes it useful when one party to a trade wants a digital dollar. But he said this does not make RLUSD a global cross-ledger routing asset.
“RLUSD is not trying to be a swap baby,” Shah wrote. “It’s trying to be a juice box — something specific, of known value, useful when both sides of a trade want a dollar.”
The distinction is even more important in markets where there is no natural dollar leg. Shah cited examples such as the exchange of tokenized Treasuries for euro-denominated money market funds, lending markets denominated in various assets, and other cross-asset activities that do not begin or end in dollars. In those cases, the ledger needs to have a neutral bridge asset in the middle, he said.
Three reasons why RLUSD is not an XRP killer
Shah gave three reasons why he believes RLUSD cannot perform this function. The first is source risk. RLUSD exists because the company mints it and holds dollars as reserves. This is the norm for stablecoins, but Shah said it becomes a structural weakness if the stablecoin becomes a mandatory routing asset for all trades.
“If any stablecoin issuer has a problem — a regulatory problem, a banking problem, a court order to freeze accounts, a licensing problem — the stablecoin might have a problem as well,” he wrote, adding that this was a general point about issuing stablecoins and not a claim about any specific issuer. “It’s okay if a stablecoin is one asset among many. It’s a serious design flaw if a stablecoin is the asset through which all trading routes pass.”
the The second issue is neutrality. Stablecoin issuers must adhere to sanctions, court orders, blacklists, and geographic restrictions. These controls are appropriate for a regulated stablecoin, Shah said, but pose a problem if the same token is expected to route transactions across a permissionless global ledger.
“The router should work for everyone across jurisdictions and counterparties, without an intermediary who can decide who is allowed to trade,” Shah wrote. “Under the current protocol design, no party can freeze XRP or prevent it from settling trades. This neutrality is a structural requirement of the steering role.”
The third point is market structure. Liquidity pools and automated market makers require two different assets. There can be combinations between RLUSD and euro stablecoins, or RLUSD and tokenized treasuries. But Shah argued that the broader question is which non-RLUSD assets become the common bridge across the ledger. From Evernorth’s perspective, that asset is XRP.
“In a world of hundreds of… Premium assets“, he wrote. “Not every couple can have their own pool. “There’s not enough capital or enough market maker attention. Ultimately, a small number of assets do most of the bridging work.
XRP is well-positioned for this role because it is among the most liquid assets on the XRP ledger across a wide range of other assets, because the protocol’s discovery paths through it by default, and because market makers focus capital on XRP pairs where there is volume, Shah said. He also cited XRP’s lack of an issuer, resistance to censorship under the current protocol design, and years of continuous operation as relevant attributes of bridge assets.
The post also expanded the argument beyond circulation. Shah said XRP can act as collateral in cross-chain lending because it is liquid, widely accepted, and not subject to an issuer that can interfere with the asset during the life of the loan. He also highlighted escrow, where XRP can be locked for release at a later date or under certain conditions, with a ledger enforcing the rules.
For Evernorth, the broader premise is that cross-chain financing will need digital dollars and channel assets as more assets move across the chain. Shah was careful to frame this as a forward-looking view subject to uncertainty, but said the roles remain separate.
“We are not making the case that RLUSD is unimportant,” he wrote. “Cross-chain finance growth requires a high-quality digital dollar, and RLUSD is designed to be one. We believe that the dollar leg and the routing leg are two different functions, and both grow with the size of the system.”
At press time, XRP was trading at $1.37.
Featured image created with DALL.E, a chart from TradingView.com
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