Recently, Ripple declared its intention to join the stablecoin market. The revelation caused a stir in the market considering its market capitalization of $33 billion. Although the statement was well received, it also included a tacit admission that XRP was falling short of the standards set by the payment industry. To facilitate international money transfers and trade through financial institutions, Ripple established XRP.
The network even partnered with SABB, Lemonway, and Banco Rendimento. But the majority of these partners don’t mainly accept XRP as payment. The erratic nature of ripple is a primary cause of this.
As a result, Ripple’s stablecoin introduction makes sense for the network. The cryptocurrency service provider declared that the stablecoin will have a 1:1 USD backing. Additionally, the stablecoin will be financed by short-term US government treasuries, cash equivalents, and USD deposits.
The most recent action taken by Ripple is encouraging for developers aiming to go public. Interest and transaction fees are the sources of revenue for stablecoins. When a stablecoin issuer buys corporate or government bonds, interest is earned.
On the other hand, transaction fees happen when users transfer their Staticcoin to other accounts or utilise it for trading. Because of this, the majority of stablecoins make enormous profits using both strategies. Since interest rates are currently at a 20-year high, interest has been the preferred option for many.
Apart from generating income, Ripple is also working on a stablecoin that will be useful in many other industries. Since NFT and DeFi are going to be utilised in the XRP Ledger utility, they are crucial elements of Ripple’s approach.
Even though Ripple’s stablecoin news generates a lot of publicity, there’s a chance it could fail. Over time, the stablecoin market has grown extremely crowded and cutthroat.
Furthermore, over the past few years, stablecoins issued by large corporations have not been able to capture market share. Ripple will therefore need to overcome enormous obstacles in order to leave a lasting impression on the sector.