Ripple CTO David Schwartz moots US-dollar stablecoin funded by XRP

In a blog post outlining ways to improve the XRP ledger and wider ecosystem, Ripple CTO David Schwartz has proposed the creation of a stablecoin (a cryptocurrency whose price is linked to a fiat currency like the US dollar) that is collateralized with the XRP cryptocurrency.

Typically, stablecoins involve one party looking after a huge supply of the fiat currency, which is used to give value and stability to the cryptocurrency by allowing anyone to cash out at any point in time. But instead of tying its mooted stablecoin to a fiat currency, Ripple would back it with the equivalent amount of value in XRP. “The key distinguishing property of this proposal is that the stablecoin is always redeemable for XRP on the ledger from the collateral pool,” he said.

This is a similar model to DAI, a stablecoin built on Ethereum that is collateralized with Ethereum’s native cryptocurrency ether (ETH).