Ripple has announced plans to launch a US dollar-backed Stablecoin to compete with Tether’s USDT and Circle’s USDC, and hopes to gain market share over the next five years.
Ripple has been considering launching a Stablecoin for over a year, and believes that the existing Stablecoin ecosystem is not as diverse and robust as it could be. Ripple’s Stablecoin will be pegged at a 1:1 ratio with the dollar and backed by US dollar deposits, short-term US government Treasuries, and other cash equivalents. Ripple also expects the Stablecoin market to surpass $2 trillion by 2028.
Ripple’s chief technology officer David Schwartz said that the reality of launching a new Stablecoin that could attract hundreds of millions, billions, or tens of billions of dollars would lead to concerns. However, they are leaning on their credibility, track record in the space and strong balance sheet to squeeze their way into the Stablecoin market, according to Coinmarket.com.
Decentralised finance (DeFi) protocols in Europe could soon be subject to new regulations what with the European Commission evaluating the DeFi industry and asking for protocols to obtain a MiCA license in the near future.
According to the Markets in Crypto-Assets (MiCA) regulatory framework for digital assets, the European Commission is mandated to assess the DeFi market and consider regulations for the sector by December 30, 2024.
DeFi represents a shift from traditional, centralised financial systems to peer-to-peer finance enabled by decentralised technologies built on the Blockchain. While traditional finance laws often depend on regulating central parties like banks or financial services providers, decentralised systems operate without such intermediaries.
According to XReg consulting partner Nathan Catania eventual DeFi regulations would apply to all non-fully decentralised applications, including DeFi frontends. Catania said that the MiCA regulation lacks a clear definition of decentralisation, and the rules for DeFi would depend on how decentralisation is defined.
Ethena Labs aims to differentiate its synthetic dollar product, USDe, from other Stablecoins by reducing reliance on the traditional banking system.
USDe was launched on Ethereum on February 19, 2024, promising a 27.6 per cent annual percentage yield (APY) on staked USDe at the time, which raised concerns in the community. While USDe’s APY peaked at 113 per cent on March 5, it has since fallen to 7.15 per cent.
Incidentally, USDe was previously backed by Ether, Ether-based liquid staking tokens, and Tether. However, Ethena Labs had added Bitcoin as collateral, claiming it would provide a safer and more robust product for USDe token holders. However, after the fall, Ethena acknowledged that Bitcoin does not offer a native staking yield like staked Ether, adding that staking yields of 3-4 per cent are less significant during bull markets. USDe currently holds the fifth-largest market cap, trailing USDT, USD Coin (USDC), Dai (DAI), and First Digital USD (FDUSD). The team behind USDe now hopes this move will significantly scale its current $2 billion supply.
