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Why Ripple’s stablecoin launch makes sense
April 05, 2024
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Yesterday, Ripple announced it plans to launch a US dollar stablecoin on the XRP Ledger and Ethereum blockchain. It will be a high quality stablecoin backed by short term Treasuries, cash and equivalents. This makes tremendous sense for Ripple as a company. For investors in XRP, it could be neutral to negative, with the reasonably stable XRP reinforcing that perspective.

Why it makes sense for Ripple

Ripple has cash and, apart from XRP, has yet to produce a money machine. Hence, its expansion beyond using XRP as a bridging currency for cross-border payments has continued apace. In the last couple of years, it has launched a CBDC consultancy, acquired Metaco, the bank digital asset custody technology firm, and more recently, acquired Standard Custody & Trust.

The acquisition of Standard Custody & Trust with its New York Trust charter likely met a couple of objectives. If real world assets (RWAs) are to take off, they require custody. In some cases, trust companies will need to lock and hold the digital twin. Stablecoins are really the first type of real world asset to take off at scale. Standard Trust can act as a trustee for the stablecoin reserves.

Using Paxos Trust as an example, its own activities, such as issuing the Paxos dollar, enabled its clients such as Binance and PayPal to have confidence in Paxos to issue stablecoins on their behalf. In the near future, there is likely to be a proliferation of stablecoins, so there could be quite a few potential clients. However, these would be Ripple’s Standard Trust clients, not related to XRP.

Ripple’s specific stablecoin use cases

Ripple highlighted specific benefits for its own stablecoin. These include helping with global on and off-ramps for cross-border payments. In some jurisdictions, clients might prefer to hold onto dollars rather than convert to less stable local currencies. Additionally, Ripple mentioned that “stablecoins are the entry points for legacy financial systems to connect to the world of decentralized finance (DeFi).”

Ripple points to a Bernstein forecast that stablecoins will grow to a market capitalization of $3 trillion within four years. We agree that there are likely to be more stablecoins on offer initially. On the one hand, less market dominance is good for competition. However, payments are based on network effects. It’s inconvenient to have to switch between currencies constantly. And crypto exchanges don’t want to quote dollar prices against multiple stablecoins; they prefer only one or two. For this reason, there is likely to be a relatively small number of significant stablecoins in the medium term.

A stablecoin impact on XRP

This latter point about too many cross currency exchange rates is the concept underpinning XRP. Rather than having many cross currency rates between thinly traded currencies, each one just has a rate against XRP, the bridging currency.

However, historically, the US dollar has played this role. So perhaps with a stablecoin, some might choose the stablecoin for bridging.

Hence, on the face of it, it could reduce the role of XRP. However, if the stablecoin increases the utility of the XRP Ledger, that could be good for XRP.

A few months ago, Ripple CEO Brad Garlinghouse answered this exact question about a stablecoin versus XRP as a bridging currency.

“I see stablecoins as a complement or even an accelerant to what Ripple’s doing at its core,” Garlinghouse said when interviewed by the CEO of SCB 10X.

“Stablecoins address a single currency. So if you’re just using a domestic use case, stablecoins can be a great solution. If you’re cross-border, having a bridge currency versus a stablecoin has some advantages.”

He argued that significant effort has gone into building liquidity between XRP and the various fiat currencies through a single API.

He also noted that when using stablecoins, people might hold them for days and they don’t always keep their peg. In contrast, with XRP designed as a bridging currency, the parties only hold XRP for seconds.

While Ripple probably wouldn’t have survived had it not profited from XRP sales, its current strategy of building RWA infrastructure such as custody, a trust company, and now stablecoins makes a ton of sense.

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List Of Cardano Wallets

Well-known and actively maintained wallets supporting the Cardano Blockchain are EternlTyphonVesprYoroiLaceADAliteNuFiDaedalusGeroLodeWalletCoin WalletADAWalletAtomicGem WalletTrust and Exodus.

Note that in case of issues, usually only queries relating to official wallets can be answered in Cardano groups across telegram/forum. You may need to consult with specific wallet support teams for third party wallets.

Tips

  • Its is important to ensure that you're in sole control of your wallet keys, and that the keys used can be restored via alternate wallet providers if a particular one is non-functional. Hence, put extra attention to Non-Custodial and Compatibility fields.
  • The score column below is strictly a count of checks against each feature listed, the impact of specific feature (and thus, score) is up to reader's descretion.
  • The table represents current state on mainnet network, any future roadmap activities are out-of-scope.
  • Info on individual fields can be found towards the end of the page.
  • Any field that shows partial support (eg: open-source field) does not score the point for that field.

Brief info on fields above

  • Non-Custodial: are wallets where payment as well as stake keys are not shared/reused by wallet provider, and funds can be transparently verified on explorer
  • Compatibility: If the wallet mnemonics/keys can easily (for non-technical user) be used outside of specific wallet provider in major other wallets
  • Stake Control: Freedom to elect stake pool for user to delegate to (in user-friendly way)
  • Transparent Support: Easy approachability of a public interactive - eg: discord/telegram - group (with non-anonymous users) who can help out with support. Twitter/Email supports do not count for a check
  • Voting: Ability to participate in Catalyst voting process
  • Hardware Wallet: Integration with atleast Ledger Nano device
  • Native Assets: Ability to view native assets that belong to wallet
  • dApp Integration: Ability to interact with dApps
  • Stability: represents whether there have been large number of users reporting missing tokens/balance due to wallet backend being out of sync
  • Testnets Support: Ability to easily (for end-user) open wallets in atleast one of the cardano testnet networks
  • Custom Backend Support: Ability to elect a custom backend URL for selecting alternate way to submit transactions transactions created on client machines
  • Single/Multi Address Mode: Ability to use/import Single as well as Multiple Address modes for a wallet
  • Mobile App: Availability on atleast one of the popular mobile platforms
  • Desktop (app,extension,web): Ways to open wallet app on desktop PCs
  • Open Source: Whether the complete wallet (all components) are open source and can be run independently.

Source

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XRP: r9pid4yrQgs6XSFWhMZ8NkxW3gkydWNyQX
XLM: GDMJF2OCHN3NNNX4T4F6POPBTXK23GTNSNQWUMIVKESTHMQM7XDYAIZT
XDC: xdcc2C02203C4f91375889d7AfADB09E207Edf809A6

 

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