Owned stablecoin and the end of the court case: how is Ripple (XRP) going?
Litigation with the SEC
After years of litigation with the U.S. Securities and Exchange Commission (SEC), the story finally came to its logical conclusion: according to the court ruling, Ripple must pay $125 million in fines and not violate securities laws from now on. Note that initially, the regulator requested a $2 billion fine, but eventually, the court reduced the requirements by 94%, recognizing that the company overplayed them.
Recall that Ripple's legal battle with the SEC began in 2020 when the latter accused Ripple of selling unregistered securities (recognized as XRP tokens) and illegally raising $1.3 billion.
Ripple's DeFi ecosystem
In April 2024, the Ripple Labs team proposed expanding its XRP Ledger (XRPL) platform by adding a decentralized finance (DeFi) ecosystem. First, the company proposed to launch an XRPL-based lending protocol that would allow cryptocurrency borrowing without collateral. On the other hand, liquidity providers can deposit tokens such as XRP, Wrapped BTC (WBTC), and Wrapped ETH (WETH) and earn interest by lending in their tokens.
However, one of the main features of the future protocol, according to the Ripple Labs team, will be that borrowers and lenders will be able to agree on the terms of the loan outside the platform and fix them on the blockchain. Unlike decentralized lending platforms such as Aave and Compound, the company's proposed platform will do away with collateral by using underwriting outside of the XRP Ledger platform.
Ripple already has its own, albeit still underdeveloped, DeFi ecosystem, which includes:
- The decentralized XRPL DEX exchange, which allows token trading paired with XRP (and in the future with the RLUSD stablecoin, which will be written about below);
- Cross-chain protocol 21.co allows token transfers between XRP Ledger, Bitcoin, Solana, Dogecoin, Cardano, Polkadot, Litecoin, and BNB Smart Chain (BSC) networks.
A new stablecoin and its fake
In June 2024, the CEO of Ripple Labs announced the launch of his stablecoin called Real USD (RLUSD), pegged to the U.S. dollar exchange rate. One of the main goals of launching its stablecoin is to expand Ripple's audience and bring additional liquidity to the ecosystem. According to the company, the Real USD stablecoin is scheduled to launch by the end of 2024.
In addition, Ripple Labs plans to partner with various countries to provide its XRP Ledger blockchain platform to create and transact with local digital currencies (CBDCs). The exact list of countries has not yet been disclosed, but Ripple Labs is reportedly involved in pilot projects to launch CBDCs in countries such as:
- Georgia,
- Bhutan,
- Montenegro,
- Palau.
The news of Ripple Labs launching its stablecoin did not escape the attention of scammers: enterprising attackers released a fake token, RLUSD. In the XRP Ledger blockchain, users can create accounts and issue tokens with non-unique names: the original asset can only be identified using an "r-address" in a blockchain browser such as XRPScan. The fake token issuer's account was flagged as suspicious by XRPScan. Still, the attackers have already managed to raise significant Ripple tokens by trading the fake RLUSD on decentralized exchanges (DEXes).
Still a long way from ATH
Judging by the metrics, Ripple Labs' protracted legal battle with the SEC has deterred investors and made the case more difficult due to uncertainty over the outcome. In addition, Ripple's cryptocurrency has, albeit only slightly, surrendered its position: while XRP was one of the top three cryptocurrencies along with bitcoin and ether in August 2020, as of August 2024, it ranks only 7th, behind Tether (USDT), Binance Coin (BNB), Solana (SOL), and USD Coin (USDC).
The XRP token itself is still 84% below its all-time high (ATH) reached in 2018, even with the rate rising on the back of positive news about the end of the SEC litigation. Even though the XRP token is still one of the top 10 largest cryptocurrencies by capitalization, Forbes considers the XRP Ledger blockchain a "crypto zombie," along with Cardano, Litecoin, and several other networks.
In a sense, there is some truth in this definition because, in terms of the pace of development of the ecosystem and its functionality, Ripple is clearly behind its competitors Ethereum, BNB Chain, Polygon, Arbitrum, TON, and even Cosmos, whose capitalization is much smaller. However, Forbes' arguments against Ripple have been criticized by the crypto community, as the Ripple Labs team does not stand still and continues to develop partnerships in the banking sector. In contrast, many others are focused mainly on providing a wide range of financial services on the DeFi market.
