Key Takeaways
- Blockchain technology company Ripple on Thursday announced a plan to issue a U.S. dollar-backed stablecoin on the XRP Ledger and Ethereum networks.
- Stablecoins operate at the center of the emerging decentralized finance (DeFi) sector, and this new stablecoin issuance is intended to attract new users and liquidity to XRP Ledger.
- Currently, Tether USD is by far the largest stablecoin when measured by market capitalization, with more than $100 billion worth of tokens in circulation.
Blockchain technology company Ripple said Thursday that it plans to launch a U.S. dollar-denominated stablecoin in an effort to bridge the gap between cryptocurrency and traditional finance and to generate more uses and liquidity for the XRP Ledger blockchain.
Ripple's new stablecoin will be issued on both the XRP Ledger and Ethereum networks at first, and the main goal is to drive more liquidity, developers, and users to XRP Ledger, which is the native blockchain of the digital asset XRP. It joins the growing stablecoin market, in which crypto tokens are pegged 1:1 to the U.S. dollar and are backed by U.S. dollar deposits, short-term U.S. Treasurys, and other cash equivalents.
The Ripple stablecoin is also expected to be launched on additional blockchains over time. “This is a natural step for Ripple to continue bridging the gap between traditional finance and crypto,” Ripple CEO Brad Garlinghouse said in a statement.
Ripple continues to deal with a lawsuit from the Securities and Exchange Commission (SEC) regarding the legal classification of XRP as a security.
DeFi Is Built on Stablecoins
As a massive holder of XRP, Ripple has an incentive to bring more financial activity to XRP Ledger. And it's no secret that the decentralized finance (DeFi) sector is mostly built on stablecoins on various blockchains.
For example, six of the top 10 trading pairs ranked by seven-day trading volume on the version of DeFi exchange Uniswap that exists on Ethereum involved at least one stablecoin as of Thursday. Additionally, three of the top five borrowed assets on the Ethereum version of open-source liquidity protocol Aave are stablecoins.
Wrapped Bitcoin, which is a token backed by Bitcoin that's held by digital asset custody provider BitGo in a manner similar to a stablecoin, is also a top asset used in these DeFi apps.
Way To Attract More Users to XRP Ledger
With so much concentration of DeFi activity in stablecoins, Ripple said it sees the issuance of its own stablecoin as a way to attract users to the XRP Ledger ecosystem.
“The XRP Ledger’s native capabilities, including a decentralized exchange and automated market maker, were built to utilize XRP as the bridge asset," Ripple President Monica Long said. "Bringing a trusted stablecoin onto XRPL will drive more adoption and development, contributing to a vibrant ecosystem.”
Tether (USDT) is the current juggernaut of the stablecoin market, with a total value of just over $106 billion in circulation on various blockchains as of Thursday, according to data from CoinMarketCap. The only other noteworthy stablecoin offering in terms of size is USD Coin, which had a total market cap of just under $33 billion as of Thursday afternoon.
FAQs
Ripple's new stablecoin will be issued on both the XRP Ledger and Ethereum networks at first, and the main goal is to drive more liquidity, developers, and users to XRP Ledger, which is the native blockchain of the digital asset XRP.
Why is Ripple launching a dollar-backed stablecoin? ›
The official announcement highlighted Ripple's intention to create a high-quality, trustworthy alternative to existing stablecoins like Tether (USDT) and USD Coin (USDC). These established players have faced criticism in the past regarding transparency and the nature of their reserves backing the peg.
Will XRP be the bridge currency? ›
XRP serves multiple purposes within the Ripple ecosystem. It acts as a bridge currency, for seamless international trade by converting fiat money into XRP and then into the desired currency, thereby reducing costs and settlement times.
Is XRP a dead coin? ›
Despite being termed time and again as a dead asset, XRP keeps rising as a phoenix in headlines with the recent news of its feud with the SEC and the potential upcoming IPO.
How risky is Ripple? ›
“Investing in XRP is risky and may not be suitable for most investors due to the high price volatility and the difficulty in predicting future trends in the cryptocurrency market,” Drozdz says. This advice highlights the need for prospective investors to consider their own risk tolerance and financial goals carefully.
What happens if XRP becomes a stablecoin? ›
“A stablecoin will help amplify more liquidity in more use cases, but XRP will continue to act as a bridge asset on chain,” said Infanger. An example of how the two will work together, said Infanger, is to use the stablecoin for a euro-to-dollar payment between G7 countries during “normal working hours”.
Does Ripple have a future? ›
Projections suggest the XRP supply might last up to 70,000 years due to this deflationary mechanism, though this depends on future developments. While XRP burning has a deflationary effect, it is likely to have a minimal impact on the price in the short to medium term.
Can XRP reach $100 dollar? ›
It is completely absurd to think xrp will ever reach that price. Currently, the trading price of xrp is $0.51 with MC of $27.67B. Probably, the price of xrp might reach $4-$7 or $10 during the bull run.
Will XRP reach $1 again? ›
Will XRP reach $1 any time soon? So XRP should gain plenty of value over time from Ripple's money-transfer operations, and the token also benefits from the market-moving impact of predictable Bitcoin gains. I can't promise that XRP will reach $1 per token in 2024, but the general trend line certainly points upward.
Will XRP ever reach $20? ›
Armando Pantoja, a prominent crypto figure, has expressed optimism about XRP's future. He believes the asset's true value lies between $8 and $20 and predicts it will reach this range by 2026. The $20 target represents a staggering 3,557.6% increase from its current price.
If the crypto market cap hits $3 trillion and XRP retains its current 1.18% dominance, its price could ascend to $0.636 by 2025. In a more bullish scenario of the crypto market surging to $10 Trillion, the price of XRP could soar to a staggering $1.12, resulting in a potential 6x return for investors by 2030.
How high can XRP go in 2025? ›
XRP Price Prediction 2025
| Month | Minimum Price | Maximum Price |
|---|
| August 2025 | $0.736 | $0.891 |
| September 2025 | $0.767 | $0.931 |
| October 2025 | $0.798 | $0.970 |
| November 2025 | $0.829 | $1.01 |
8 more rowsThroughout 2024, XRP is expected to move between $0.26 and $0.62 with an average forecasted price of $0.41. The forecaster at InvestingHaven predicts XRP to move in a range between $0.40 and $0.88 throughout 2024 but dramatically increases upside targets for 2025 and 2026 to $3 and ultimately $9 to $10.
Will Ripple make me a millionaire? ›
But for XRP to turn a $10,000 investment into over $1 million, it would need to generate a 100-bagger gain. Even the most bullish forecasts fall short of those expectations. Last June, crypto hedge fund manager Thomas Kralow claimed that XRP's price would hit $30 by the end of 2023.
Will XRP win a lawsuit? ›
The SEC accused Ripple of selling XRP in an unregistered security offering. The outcome of the U.S. regulator's court case against Ripple might still have far-reaching consequences for the cryptocurrency industry. Both the SEC and Ripple emerged somewhat victorious in this court case.
Why is Ripple banned in US? ›
The SEC sued Ripple, its CEO Brad Garlinghouse and co-founder Chris Larsen in 2020, accusing them of illegally raising more than $1.3 billion in an unregistered securities offering by selling XRP.
Is Ripple launch stablecoin pegged to the U.S. dollar? ›
It joins the growing stablecoin market, in which crypto tokens are pegged 1:1 to the U.S. dollar and are backed by U.S. dollar deposits, short-term U.S. Treasurys, and other cash equivalents. The Ripple stablecoin is also expected to be launched on additional blockchains over time.
What is the point of a USD stablecoin? ›
So, what is the point of a stablecoin? A stablecoin is a cryptocurrency that attempts to peg its value to the value of another asset, including fiat currencies, commodities, and cryptocurrencies. The most popular types of stablecoins track the value of fiat currencies, including US dollars (USD) and Euros (EUR).
What is dollar backed stablecoin? ›
Stablecoins are a type of cryptocurrency whose value is tied to another asset class to keep a stable, steady value. The most popular kind of stablecoins are fiat-backed stablecoins, which are tied to currencies such as the U.S. dollar.
What is XRP backed by? ›
Unlike most cryptocurrencies, which are decentralised and therefore not run by a single entity, the cryptocurrency XRP is controlled by a company called Ripple.
