Ripple Is Launching A Stablecoin To Compete With USDT and USDC

Ripple, the company behind XRP, has indicated its intention to introduce a stablecoin pegged to the US dollar, with the aim of establishing a competitive position against established players such as Circle and Tether within five years. ing.

In a pre-announcement discussion, Ripple’s Chief Technology Officer David Schwartz shared insights on the stablecoin’s roadmap, with initial issuance occurring on both the XRP Ledger and Ethereum blockchain platforms. was shown.

Schwartz humorously noted that no decisions have been made regarding the stablecoin’s ticker symbol and official name, suggesting it will be temporarily called the “Ripple Stablecoin.”

Ripple intends to offer a product that directly competes with USDC

Ripple has been considering introducing its own stablecoin for over a year. Chief Technology Officer David Schwartz criticized the current state of the stablecoin market for lacking diversity and robustness.

The market’s valuation is pegged at $150 billion, and Schwartz sees significant growth potential, predicting it to reach $2 trillion by 2028. He pointed to the dominance of just two large players and emphasized that the market, especially the decentralized finance (DeFi) market, is not like that. It revolves around one winner.

Ripple aims to introduce a stablecoin that is tied directly to the US dollar on a 1:1 ratio. The digital currency is backed by a combination of U.S. dollar deposits, U.S. Treasury bills, and other cash-like assets.

Drawing inspiration from Circle’s commitment to regulatory compliance, Ripple intends to offer a product that competes directly with USDC, with a focus on transparency and a compliance-first approach in how it supports stablecoins.

Schwartz details Ripple’s strategy, emphasizing the company’s intention to capture market share rather than seek marginal profits through risky financial strategies.

There may be concerns about investments ranging from hundreds of millions to tens of billions.

A third-party accounting firm will conduct an audit of the accumulated assets, and Ripple promises to publish monthly attestations. Schwartz reflected on the skepticism with which Tether’s USDT token was met in its early days, highlighting initial concerns that Tether’s operators would run away with funds due to strong financial incentives.

However, perceptions have changed as Tether has established itself as a long-term player in the market. Schwartz pointed to the inevitable concerns that arise with the introduction of new stablecoins, which could attract huge investments ranging from hundreds of millions to tens of billions of dollars.

As Ripple enters the highly competitive stablecoin space, it aims to alleviate these concerns through its established reputation, track record in the crypto industry, and strong financial foundation.

Mr. Schwartz expressed optimism about Ripple’s position in the stablecoin market, considering this result a considerable success, as Ripple is the third largest stablecoin provider in a market that has expanded tenfold. I speculated that a scenario would emerge.

New stablecoins provide liquidity and capture volatility

Ripple was asked about its motivations for introducing a stablecoin when XRP is already used in real-time gross payment systems, including exchange and remittance services, primarily for financial institutions.

David Schwartz said that RippleNet is adopting XRP to facilitate transparent payments for non-bank payment companies, but that there are markets where these entities cannot access with XRP alone or where additional liquidity is needed. The answer is that there is a necessary market.

Mr. Schwartz elaborated on the strategy, noting that offering a variety of solutions to improve the customer experience can help expand the customer base. He emphasized the limitations of relying solely on XRP, saying that in scenarios where XRP is not an option, customers’ requests will ultimately have to be denied.

Additionally, the stablecoin launch by Ripple is expected to enhance the capabilities of the automated market makers recently introduced to the network. According to Schwartz, stablecoins are expected to enrich Ripple’s ecosystem by capturing volatility and arbitrage opportunities in various assets while enhancing liquidity.

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