By
Svetlana Soroka
April 29th, 2024
Considering Ripple’s position and reputation in the crypto ecosystem, the new stablecoin is likely to be a tough rival for USDT and USDC.
During the recently held Paris Blockchain Week, Ripple Labs CEO Brad Garlinghouse revealed why the blockchain payments platform is pursuing a United States dollar-pegged stablecoin. According to Garlinghouse, Ripple plans to launch this potential stablecoin before the end of this year.
Ripple Plans to Improve XRPL Liquidity with Stablecoin
The Ripple executive acknowledged that stablecoin has proven over time to be an important bridge between Traditional Finance (TradFi) and Decentralized Finance (DeFi). Ordinarily, digital asset investors utilize this token which is usually pegged to a fiat currency, to enhance trade, provide liquidity for currency hedging, and keep their portfolio away from crypto market volatility.
Stablecoins can also serve as an alternative for international remittance and even inflation hedging. With XRP, Ripple has already secured a pedigree position in facilitating such cross-border settlements but the payment firm plans to do much more. This time around, Ripple wants to use the proposed stablecoin to support the growth of its public blockchain, the XRP Ledger (XRPL).
As a cross-border payment company, Garlinghouse says launching a stablecoin is like a natural cause for the firm. A statement from Ripple noted that the firm plans to “leverage both XRP and the stablecoin in its payment solution to further improve the customer experience and serve as the first enterprise use-case of the asset at scale. There is demand from Ripple’s customers in emerging markets to enable stablecoin payouts”.
Garlinghouse listed Tether and Circle as two stablecoin issuers that have been performing well over time. In his opinion, both protocols will continue to excel in the stablecoin market but Ripple wants a share of the growing market. Currently, the stablecoin market is valued at $150 billion with USD stablecoins leading the market.
Per the statement from Garlinghouse, the value could rise to about $3 trillion in another four to five years. It has been discovered that liquidity growth on several Layer-1s (L1) followed an initial launch of a stablecoin on such protocols. Hence, Ripple’s goal with the stablecoin is to grow liquidity on its protocol.
Ripple’s Stablecoin to Compete with USDT and USDC
Considering Ripple’s position and reputation in the crypto ecosystem, the new stablecoin is likely to be a tough rival for USDT and USDC. Ripple’s international compliance with many regulatory frameworks after its debacle with the SEC would also be an added advantage as it tries to secure a position in the stablecoin market.
“Bringing a trusted stablecoin onto XRPL will drive more adoption and development, contributing to a vibrant ecosystem,” Monica Long, Ripple President, highlighted.
The stablecoin will be launched on Ethereum (ETH) under the ERC-20 token standard and on the XRPL network.
Regarding its quest to improve XRPL liquidity, Ripple Labs has entered certain strategic partnerships in the past including the ones with its subsidiaries Standard Custody and Metaco. While Ripple Labs acquired Metaco, a Swiss-based firm, for $250 million as part of its expansion into institutional crypto custody last year, its closure of Standard Custody was first teased earlier this year.