David Schwartz, the CTO of Ripple, has shared fresh insights into the company’s recently unveiled roadmap, which focuses on integrating major institutions into the world of decentralized finance (DeFi). Schwartz discussed this topic during a podcast at the ongoing 2024 CoinDesk Consensus conference.
The Importance of Ripple’s Institutional-Focused Roadmap
Schwartz explained that the strategy involves empowering institutions to create highly regulated financial products, such as traditional loan portfolios, that can interact with DeFi ecosystems. To illustrate this concept, Schwartz used the example of a regulated financial entity issuing conventional loans for real estate or business, and then tokenizing this debt, allowing it to be traded within a DeFi system.
Highlighting the significance of institutions in driving widespread crypto adoption, Schwartz drew parallels with the evolution of the internet. He emphasized that the internet initially benefited from government and military use, which eventually led to broad grassroots adoption. Schwartz used this analogy to underscore the importance of a synergistic approach in establishing dominance and expansion within a system.
In this context, Schwartz emphasized that the XRP Ledger is a blockchain platform that is well-suited for these types of applications.
Institutions are Now Bringing Users to Crypto
Furthermore, Schwartz suggested that it is now widely accepted that institutional adoption serves as a stepping stone to grassroots adoption. However, he acknowledged that Ripple’s initial foray into institutional adoption was premature. According to Schwartz, when institutions adopted Ripple’s payment technology, such as using XRP for transactions, end users were not aware of the underlying blockchain involvement. Banks that used Ripple’s technology did not bring their customers into the blockchain space.
Regarding whether the crypto space has now embraced Ripple’s strategy of targeting institutions to drive mass adoption, Schwartz pointed to stablecoins like USDT as undeniable evidence. He noted that stablecoins are highly institutionalized, yet they fuel completely decentralized economies.
Additionally, Schwartz expressed enthusiasm about the current trend of institutions not only adopting blockchain technology but also bringing their customers onto the blockchain or enabling blockchain-based activities.
Addressing Regulation
Schwartz also addressed skepticism surrounding regulation. He explained that it is possible to have thoroughly regulated assets like stablecoins, loan portfolios, or tokenized securities. These assets can undergo rigorous know-your-customer (KYC) and anti-money laundering (AML) processes for every customer, while the underlying tokens representing ownership or collateral can remain completely decentralized.
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