The global stablecoin race has begun

2022 could be remembered as the year of the stablecoin. Despite having a rocky start with the Terra implosion, the stablecoin sector rebounded to a new high of $1 trillion in monthly trading volume in August, and was on the agenda of the World Economic Forum, the Committee on Payments and Market US infrastructure and regulators as they continue to assess its role and impact on economic markets.

As stablecoin growth continues and more use cases are explored across the broader cryptocurrency landscape, Ripple has also picked up the pace and gained traction with new partners like Stably and STASIS. Together with Ripple, they will leverage the XRP Ledger (XRPL) as a fast, low-cost, and scalable blockchain that offers clear liquidity, reliability, and interoperability benefits for stablecoin issuers.

Choosing the Right Blockchain and Digital Currency Solution

Stablecoins benefit from the transactional benefits of a cryptocurrency coupled with the stability (hence the name) of a fiat currency. This opens new doors for further financial inclusion and accelerating economic growth by enabling digital purchase histories and greater access to credit, and by removing the friction from cross-border payments for businesses of all sizes.

However, the key to maximizing these results is choosing the right issuing blockchain. For financial institutions, innovators, central banks, and other potential stablecoin issuers, security and reliability are paramount when evaluating blockchains. Furthermore, the sustainability and interoperability of a chain are also increasingly important determinants as we continue to move towards a greener, multi-chain future.

This is why XRPL is better suited to support large-scale stablecoins. Built to support the tokenization of any asset, XRPL can handle a high volume of transactions that settle in seconds and cost just a fraction of a cent. This native token functionality also makes it easy for issuers to create, issue and manage any asset without the need for a central intermediary. XRPL’s Built-in Authorized Trust Lines feature also ensures that stablecoins and other issued tokens can only be held by accounts that the issuer itself authorizes for an extra layer of security.

New stablecoin issue on XRPL

This powerful combination of security, reliability and interoperability is what led STASIS, which issues the largest euro-backed stablecoin, EURS, to complement XRPL. As a decentralized public chain with high levels of liquidity and accessibility, XRPL also provides easy entry and exit ramps for developers, institutions, and consumers to unlock new stablecoin use cases.

Payment infrastructure provider Web3 Stably recently chose to issue its USDS stablecoin on XRPL because it offers liquidity and large-scale settlement for tokenized assets. It longed to combine its first industry-compliant stablecoin with an ultra-fast, low-cost public blockchain built for payments and known for its emphasis on compliance and transparency. It permanently allows individuals and businesses from over 200 countries to mint and redeem USDS directly on the XRP ledger.

Meanwhile, Ripple is working with the Republic of Palau to help explore a potential government-backed stablecoin on the public XRPL. The ledger’s inherently green design is very important for a country known for its leadership on climate issues.

Stablecoin as a multi-chain asset

The use of USDS and EURS across multiple blockchain networks aligns with Ripple’s vision for a multi-chain, multi-asset future. As banks and regulators also board the multi-asset train, it becomes all the more essential to understand the benefits of interacting public blockchains.

So why is interoperability important? Stablecoins rely on an issuer as a counterparty which prevents them from interacting across payment networks. With the XRP Ledger, its native digital asset, XRP, serves as a neutral bridge asset that can be sent directly without the need for a central intermediary. This makes it easy for stablecoin issuers to link two different currencies and seamlessly exchange them across payment networks quickly and efficiently. Additionally, XRPL’s automatic bridging feature helps improve liquidity between currencies for smoother and cheaper exchanges between XRP and other digital assets on the ledger.

Towards a future of stablecoins

As we move into 2023 and beyond, stablecoins will continue to grow in popularity and reach, but not without the right blockchain in place. As banks and other financial institutions continue to explore additional stablecoin use cases, cross-chain interoperability and the many benefits afforded by public and decentralized blockchain networks will be critical stepping stones on the road to a stablecoin future.

To learn more about creating, issuing or managing stablecoins on the XRP Ledger, visit XRPL.org.

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