A stablecoin tethered to the US dollar will be launched by Ripple this year, as forecasts indicate the market will grow to over $2.8 trillion by 2028.
The stablecoin will be fully collateralized by US dollar deposits, along with short-term US government treasuries and other cash equivalents, Ripple said on Thursday.
“These reserve assets will be audited by a third-party accounting firm, and Ripple will publish monthly attestations,” Ripple said. It did not specify which firm would conduct the audits.
With this move, Ripple enters the stablecoin market as a rival to well-established players like Tether and Circle. Notably, PayPal joined the fray last year when it introduced PayPal USD (PYUSD), an Ethereum stablecoin backed by the US dollar.
1/ The stablecoin market is booming – around $150B today, and projected to soar past $2.8T by 2028. There's a clear demand for trust, stability, and utility.
— Ripple (@Ripple) April 4, 2024
That's why later this year we’re launching a stablecoin pegged 1:1 to the USD on the XRP Ledger and Ethereum.…
PayPal would not likely become a dominant player in this market, especially outside of the US, according to Tether co-founder William Quigley, who spoke with Cryptonews about this. However, with a $190 million market capitalization, PayPal’s stablecoin is presently ranked 12th in the world.
A particular kind of cryptocurrency known as a “stablecoin” is designed to have very little volatility. By tying their value to outside resources like conventional fiat currencies or financial instruments, this stability is achieved.
Because of this, they provide a far less volatile option than well-known cryptocurrencies like Bitcoin and Ethereum. Because of this, risk-averse investors seeking a more reliable investment vehicle find them especially appealing.
XRP Ledger Gets Boost with Stablecoin
According to Ripple CEO Brad Garlinghouse, organizations venturing into the stablecoin space are succeeding by collaborating with players who are compliant and familiar with cryptocurrencies. “Moreover, as we introduce new products and buy businesses across several market cycles, Ripple’s track record and resilience speak for themselves,” he continued.
Additionally, he said, the move creates “more use cases, liquidity, and opportunities for developers and users.”
Initial distribution of Ripple’s stablecoin will occur on the Ethereum (ETH) and XRP Ledger (XRPL) blockchains. In the future, Ripple intends to make itself available on more blockchains, DeFi protocols, and different kinds of applications.
Launching on both XRPL and Ethereum enables cross-chain interoperability, which is an essential component for smooth communication between different blockchain networks.
Emerging Markets Drive Demand for Ripple’s Stablecoin Payouts
XRP and the stablecoin will be incorporated by Ripple into its payment solutions in an effort to improve customer satisfaction and create the asset’s first widespread enterprise use case. Notably, stablecoin payouts have garnered interest from Ripple’s emerging market customers.
It is said that the US market will be the focus of the initial launch. However, the network has not completely ruled out the idea of launching regional variants for markets in Europe and Asia.