Ripple is launching a new USD-backed stablecoin to increase utility and liquidity for its XRP Ledger.
The stablecoin aims to connect traditional finance and crypto, potentially boosting wider crypto adoption.
The coin will be available on both XRP Ledger and Ethereum, attracting developers and users.
Tether's dominance and Ripple's legal issues are potential challenges.
The stablecoin could benefit DeFi platforms and boost XRP's value.
Simply put, the stablecoin arena is a highly competitive one.
According to data from CoinMarketCap, the stablecoin market alone boasts of a staggering $154.1 billion in market cap, with some of the largest being Tether's USDT ($106 billion), Circle's USDC ($32.9 billion) and MakerDAO's DAI ($5.3 billion).
The stablecoin market
However, an unexpected new contender is entering the arena, and the internet is abuzz.
According to recent reports, Ripple is set to jump into the fray and introduce its own new
BU.S. dollar-denominated stablecoin.
This move is a calculated effort to increase the utility (and liquidity) of its native XRP Ledger blockchain, and here's everything you need to know.
The announcement from Ripple came at a time when the connection between traditional finance (TradFi) and crypto is becoming more and more significant.
The purpose of the new unnamed stablecoin is to function as a link between these two sectors, enabling acceptance, as well as quicker and easier transactions.
The Ripple stablecoin announcement
Think about it this way:
Ripple and XRP are arguably the closest cryptocurrency services to traditional finance institutions like banks and brokers.
This means that Ripple’s new stablecoin announcement is set to further bridge the gap between crypto and these institutions, winning another fight for global crypto acceptance.
Per the announcement from Ripple, the new stablecoin will be issued on both the XRP Ledger and Ethereum networks.
By so doing, more liquidity will be injected into the XRP Ledger, attracting a new wave of developers and users.
Moreover, the idea of pegging this stablecoin 1:1 with the U.S. dollar and backing it with solid financial assets is set to hoist Ripple up as one of the biggest players in the stablecoin arena.
However, there have been critics all around, with something to say about the stablecoin idea, XRP’s “stagnancy” and Ripple’s legal woes.
XRP is a stablecoin
Aside from the critics though, there have also been concerns about Tether's unchallenged dominance.
Tether, which recently approved another 1 Billion USDT Expansion on the TRON Blockchain has been the subject of concerns about a potential crash.
X user, @edward_farina here, pointed out that Tether is a “ticking atomic bomb” that might have “devastating consequences” for the crypto space if something happens.
This explains the need to issue a new stablecoin on the $XRP Ledger, which could be poised to overtake Tether.
One of the core pillars of Defi is its reliance on stablecoins.
Ripple aims to tap into this goldmine, providing much-needed "stable value" to some of the most highly traded pairs on defi platforms like Uniswap and Aave.
Moreover, Ripple is by far the biggest holder of XRP and therefore has a personal stake in the success of the XRP ledger.
The introduction of a Ripple-branded stablecoin, without a doubt, is a massive catalyst for growth, both for Ripple, XRP and the stablecoin in question.
There might be a competition issue though.
As mentioned earlier, USDT and USDC currently dominate the market, with a combined market cap of $139 billion (nearly 90% of the total).
However, the competition is set to foster growth on Ripple’s part, with the company’s strategic positioning and the unique features of the XRP Ledger giving it an edge.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.