Ripple CEO Brad Garlinghouse exudes confidence in the future of the company’s stablecoin, expressing his belief that it has the potential to capture a substantial portion of the stablecoin market. In a video that has gone viral within the XRP community, Garlinghouse shares his optimism, despite not disclosing the name of the upcoming stablecoin.
Garlinghouse’s assurance is based on Ripple’s strong financial position, which ensures that the stablecoin will maintain its peg to the U.S. dollar. He recalls an incident involving Circle’s USDC stablecoin, which experienced a loss in its peg to the dollar. Garlinghouse highlights the difficulties faced by Circle in restoring the stablecoin’s $1 peg, emphasizing the importance of a robust balance sheet.
USDC encountered a peg loss last year, plummeting to an all-time low of $0.87 on March 11. The collapse of Silicon Valley Bank (SVB), responsible for managing 25% of USDC’s reserve, led to this unfortunate event. Circle, however, assured investors of its commitment to maintaining the $1 peg and pledged to cover any shortfall in the reserve deposits if the bank failed to return 100% of them. Despite these assurances, USDC did not immediately regain its $1 peg, only doing so after a few days.
Garlinghouse attributes the difficulty in restoring USDC’s peg to Circle’s limited balance sheet. He contrasts Circle’s position with Ripple’s, highlighting the fact that if Ripple had made a similar promise, USDC would have quickly regained its $1 peg. Ripple possesses a substantial balance sheet of $20 billion to $30 billion, which provides the necessary financial backing to easily restore the stablecoin’s peg.
Garlinghouse’s comments indicate that Ripple has a stronger financial foundation than Circle and would be capable of intervening and restoring the dollar peg of its upcoming stablecoin if faced with similar challenges.
Despite the dominance of Tether (USDT) in the $161 billion stablecoin market, with a valuation of $111.95 billion, and USDC as the second-largest stablecoin, with a market cap of $32.34 billion, Garlinghouse remains confident in Ripple’s upcoming stablecoin. He acknowledges that it will face stiff competition from USDC and USDT when it launches later this year on the XRP Ledger (XRPL) and Ethereum networks. However, he firmly believes that it will secure a significant portion of the stablecoin market, which is projected to reach a valuation of $2.8 trillion by 2028.
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