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Ripple Entry into Planet Stablecoin: Potential for an Eclipse?

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8 April 2024
Alenka Grealish

Planet stablecoin will soon host a new entrant, Ripple, which recently announced that it will be launching a stablecoin tied to the US Dollar in 2024. It will join other US-based, licensed entities, Circle and PayPal, in the quest to eclipse the dominant player Tether. Eclipsing #1 is no easy feat, as proven by Circle’s valiant effort over the past 10 years.

Tether USDt towers despite criticism regarding its lack of oversight and transparency and its use in supporting illicit activity (UN report). It has held on to its ~70% market share through de-pegs (when a stablecoin value trades below or above its fiat currency peg) and regulatory penalties.

Just as gravity rules all objects on planet Earth, liquidity rules all on planet stablecoin. Tether USDt benefits from exceptional liquidity (y-axis; 24 hour trading volume; 4/8/24) and an extraordinary number of trading pairs (x-axis; the number of USDT to x pairs that can be traded across crypto exchanges).

In Ripple’s, Circle’s, and PayPal’s favor is their being licensed in the US. Hence, they are more feasible partners for traditional finance players and institutions and providers to the general public. Ripple’s differentiator is that it runs its own battle-tested blockchain, XRP Ledger. Its stablecoin will launch on XRPL and Ethereum (USDC and PayPal USD run on Ethereum). Coincidentally on the same day as Ripple’s announcement (April 4), PayPal announced the integration of PayPal USD into its Xoom money transfer platform. Transactions funded with PayPal USD will incur no Xoom transaction fees.

As crypto history has shown, dominance can evaporate as a result of fear, uncertainty, and doubt. Those players that have built a compliant bridge between planet stablecoin and earth could eclipse those that haven’t.

For further discussion of blockchain and stablecoins used in transaction banking and payments, please see the Celent report, Blockchain in Action in Payments and Transaction Banking: Spotlight on Frontrunners.