Ripple, the business-oriented blockchain platform behind XRP Ledger, is launching a stablecoin of its own that will maintain a value equal to the US dollar.

According to Ripple‘s announcement to CoinDesk, the current market value of stablecoins is over $150 billion, and it is predicted to grow beyond $2.8 trillion by the year 2028. The company emphasized the increasing demand for stablecoins that provide reliability, consistency, and practical applications.

The company announced that its upcoming stablecoin, scheduled for release “later this year,” will be fully collateralized by U.S. dollars, short-term U.S. government bonds, and other liquid assets. Initially, the digital currency will operate on Ripple’s XRP Ledger and Ethereum blockchain. The stablecoin is designed using Ethereum‘s ERC-20 token standard.
Ripple’s announcement is noteworthy as stablecoins have emerged as a preferred choice among crypto traders due to their stability, which sets them apart from more volatile cryptocurrencies like Bitcoin (BTC) and Ethereum’s Ether (ETH), in theory.

In a conversation with CoinDesk, Ripple CTO David Schwartz explained that what sets them apart is their use of dollars and Treasuries as assets, ensuring stability. They aren’t aiming for minor gains but rather seeking market dominance and a long-term presence.

Ripple, currently involved in a legal dispute with the US Securities and Exchange Commission, has announced its entry into the stablecoin market. According to Schwartz, the financial benefits were a significant factor behind this decision.

He remarked, “A part of it is driven by opportunistic reasons. This market is expanding at a rapid pace.” He further added, “Imagine running a bank that doesn’t pay any interest. Such a business could prove to be quite profitable in the present situation.”

Schwartz suggested that the new stablecoin might invigorate the XRP Ledger’s decentralized finance scene, boasting a decentralized exchange yet experiencing fewer transactions compared to other blockchains.

Based on Schwartz’s statements, transparency, which has long been a subject of examination for stablecoin creators, is a priority for Ripple as they introduce their latest token.

Schwartz announced that the company will undergo monthly audits by a reputable accounting firm and will share further details at a later time. The goal is to ensure full transparency. We are committed to taking any necessary steps to resolve any identified concerns.

Schwartz pointed out that while transparency is important, the expanding market for stablecoins like Tether’s USDT and Circle’s USDC also acts as a strong deterrent against dishonest behavior from companies such as Ripple or other stablecoin providers. Coinbase, a publicly traded US crypto exchange and investor in Circle, supports this trend.

In the beginning, Tether was viewed with suspicion by many, who believed it could collapse at any moment. According to Schwartz, this perception has shifted significantly. Now, he explains, if Tether were to misappropriate funds, it would be wiser for them to wait before doing so because the market is expanding rapidly.

In relation to Ripple, Schwartz explained, “We don’t have to aggressively increase profits by a few cents; our financial situation is already strong.”

The Ripple CTO stated that his token is mainly designed for large businesses and banks, as these entities prioritize more tangible benefits over theoretical advantages when making decisions to investors, regulatory bodies, and other relevant parties.

Ripple aims to cater to this specific market sector by partnering with American banks to secure their reserves and prioritizing compliance in their approach.

USDC is now the top choice among consumers preferring compliance-focused stablecoins. However, according to Schwartz, this market isn’t about one clear-cut winner.

“According to Schwartz, even if we were the third-best performer in a market that multiplies by 12, that wouldn’t equate to failure. While we’d certainly aim for more than that, it’s still a commendable outcome.”

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2024-04-04 16:07