Ripple CTO Highlights How XRPL-Based Tokens “Back” XRP

Schwartz says XRPL-based tokens offer more benefits to XRP. 

In a tweet today, Ripple CTO David Schwartz highlighted some major benefits XRPL-based tokens give to XRP.

His response comes after crypto journalist Zach Rector asked the community whether XRPL-based tokens “back” the sixth-largest cryptocurrency by market capitalization, XRP. According to Rector, “back” is a form of financial or material support these tokens give XRP.

Question for the #XRPLCommunity

Do XRPL Tokens “back” XRP?

Consider the definition of “back” used as a verb is the following…

Give financial, material or moral support to.

Let me know what you think! 👇 #XRP

— Zach Rector (@ZachRector7) April 9, 2023

The question attracted the interest of many XRP enthusiasts, who flooded the comment section to give their opinion. Responding to the question, an XRP supporter with the Twitter username @rippletinNZ said tokens built on the XRP Ledger do not “back” XRP.  

The user said these XRPL-based tokens only offer “a single benefit” to XRP, which involves using the sixth-largest crypto for fees. He added that both XRPL-based tokens and XRP are after the same goal- investors’ funds. 

They don’t back XRP.

They are in direct competition to XRP.

The single benefit they give to XRP is that they have to use XRP for fees, which are negligible.

Both XRP and the XRPL token are after the same thing.

Your dollar.

— rippleitin.nz (@rippleitinNZ) April 9, 2023

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@rippletinNZ’s comments seemed to be the opinion of some XRP enthusiasts, as the comment has gotten 44 likes at press time. 

Ripple CTO Thinks Otherwise

However, Schwartz does not share the same opinion. Per Schwartz, these XRPL-based tokens offer more benefits to XRP than what was highlighted by @rippletinNZ.

“I don’t think that’s quite the only benefit,” he said.

According to Schwartz, these tokens help to boost XRP liquidity because of the auto-bridging feature and the fact that the coin has no issuer other than people holding the asset class.

“They tend to increase the liquidity of XRP both because of auto-bridging and because of XRP’s position as the only asset that has no issuer and that everyone holds,” Schwartz said.

For context, the auto-bridging feature allows offers in the XRPL DEX to swap two XRPL-based tokens by potentially using XRP as an intermediary currency in a synthetic order book.

Furthermore, Schwartz said XRPL-based tokens would benefit XRP through the Automated Market Maker (AMM). It is worth noting that the AMM functionality is part of the proposed XLS-30d extension to the XRPL protocol. Once implemented, AMM will provide liquidity to the XRPL’s decentralized exchange.

TheCryptoBasic reported that Ripple developers opened testing for the XRPL native AMM in November.

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