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How Will XRP Ledger Boost RWA Tokenization? Experts Weigh In

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1 week ago

September 12, 2024

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Ripple is actively promoting the XRP Ledger (XRPL) as the ideal blockchain for tokenizing real-world assets (RWA) on an institutional scale. Ripple emphasizes security, scalability, and interoperability, positioning itself as a dependable platform for decentralized finance (DeFi) and managing tokenized assets.

In a recent exclusive interview with BeInCrypto, Ross Edwards, Senior Director for Solutions and Delivery at Ripple, offers insights into why the XRPL is uniquely positioned to bridge traditional finance with DeFi.

Instant Settlement, Stability, and Lower Risk: Why XRPL is Suitable for Financial Institutions

When discussing the XRPL’s role in transforming institutional finance, Ross Edwards was unequivocal about its foundational advantages. He pointed out the unique benefits that make the blockchain stand out for institutions looking to tokenize RWAs.

For Edwards, the key to XRPL’s success lies in its design. For instance, he highlighted that the XRPL’s transaction speed—settling in just 3 to 5 seconds at minimal cost—addresses the high costs and delays often associated with traditional financial systems.

“The XRP Ledger enables instant settlement of value, together with transparency and auditability that can really change the risk profile of transactions,” he explained.

He also elaborated that the XRPL employs a strong governance mechanism. This allows the community to introduce amendments to meet its needs, including those of financial institutions.

Moreover, it eliminates the need for custom writing, deploying, and managing smart contracts, as well as the associated audits. These functionalities ultimately will reduce risks, which is crucial for financial institutions.

“It was built for creating value and assets on-chain, for holding those securely, for trading and transferring those assets. So, it’s natively built for this. The XRP Ledger is a proven technology. It’s been running for 11 to 12 years. It’s extremely stable. […] You simply have to call the APIs of the XRP Ledger to enable those use cases,” Edwards argues.

Additionally, the Automated Market Maker (AMM) is one of Ripple’s core innovations on the XRPL. This feature, integrated directly into the protocol, allows institutions to engage with DeFi securely without the need for potentially unreliable third-party smart contracts.

What sets the XRPL’s AMM apart is its ability to aggregate liquidity across the protocol. Ripple’s liquidity strategy is specifically designed to meet the needs of institutional users.

By incorporating the AMM into the XRPL’s decentralized exchange (DEX), the process for institutions to participate in DeFi is simplified. Such a mechanism ensures both security and efficiency for large-scale operations.

The XRPL’s AMM is also capable of consolidating liquidity from across the protocol. This system ensures that institutions have access to substantial liquidity pools and can execute transactions at the most favorable prices. Moreover, it effectively minimizes slippage—a significant concern for institutions executing large transactions—and guarantees continuous liquidity for trading purposes.

Additionally, the introduction of the Multi-Purpose Token (MPT) standard will allow institutions to create complex token structures representing various asset classes. Set for release in Q3, MPT will provide greater flexibility for institutions looking to tokenize and manage diverse portfolios of assets on the XRPL.

Ripple is also looking to expand the use of the XRPL for institutional DeFi with the upcoming launch of Ripple USD (RLUSD), a fully-backed stablecoin pegged to the US dollar. Edwards sees this stablecoin as a significant step toward improving liquidity and cross-border transactions for institutions using the XRPL.

“If you’re going to work in the real-world asset tokenization space, stablecoins are a must-have. It’s going to continue to grow in importance, not just importance in the crypto world but actually importance in the financial world. And that’s why Ripple believes that issuing Ripple USD will add to the existing stablecoins out there. They will suit specific institutions and specific use cases and really help fuel or continue the growth of tokenization overall,” he said.

Leveraging DIDs and Strategic Partnerships for Growing Impact in Tokenized Assets

Besides solid infrastructure and technologies, security and compliance are paramount for institutions, especially in tokenized assets. In a prior conversation with BeInCrypto, Ripple’s Markus Infanger, Senior Vice President of RippleX, highlighted how the XRPL leverages Decentralized Identifiers (DID) to address these concerns effectively.

By integrating DIDs, the XRPL enables institutions to securely and verifiably manage user identities, facilitating compliance with Know Your Client (KYC) and Anti-Money Laundering (AML) standards. This integration helps minimize the risks of fraudulent transactions by streamlining KYC/AML processes. As a result, it enhances both security and regulatory adherence for tokenized asset transactions.

“The combination of these features, as well as others proposed to support institutional DeFi on the XRPL, such as a native Lending Protocol and Oracles, are making it easier to integrate tokenized real-world assets into on-chain financial infrastructure. Ultimately, DeFi provides new financial rails for actions such as trading, collateralizing, investing, and borrowing. Bringing real-world assets on-chain and exposing them to these rails opens up new opportunities—which is the real value of tokenizing real-world assets,” Infanger elaborated.

The increasing use of the XRPL in institutional finance stands out through its partnerships with key industry players. For example, Ripple’s partnership with OpenEden led to the introduction of tokenized US treasury bills (T-bills) on the XRPL.

Similarly, Ripple has partnered with Archax, the UK’s first regulated digital asset exchange, broker, and custodian. Archax plans to bring hundreds of millions of dollars in tokenized RWAs onto the XRPL in the coming year.

Balancing Short-Term Gains and Long-Term Growth in Tokenization

Despite the XRP Ledger’s strong foundation for institutional adoption, it has faced some challenges, particularly in on-chain activity. A recent report revealed that in the second quarter of 2024, the number of transactions on the XRPL fell by over 65% compared to the first quarter. This decrease is also seen in transaction volumes and overall DEX engagement, where trading volume fell by nearly 43%.

The average transaction cost on the XRPL also increased substantially. In Q2, the cost of transactions more than doubled compared to Q1, rising by 168%, which could contribute to the drop in activity. Additionally, fewer new wallets were created on the network, with wallet growth decreasing by 45.8%.

XRPL's On-chain Activity in H1 2024. — XRPL’s On-chain Activity in H1 2024. Source: Ripple

Furthermore, Edwards remarked that the challenges of tokenization are beyond the XRPL itself. He acknowledged that one of the biggest challenges in tokenization is its long-term nature. According to him, this requires patience and gradual ecosystem building.

“Tokenization is not something that can be done instantly. It’s not dependent on someone’s decision or ability to take an asset, write a piece of code, and store it somewhere, even if it’s a blockchain or whatever. That’s actually a very simple process. It’s about building the ecosystem and connecting together these value chains,” he said.

Edwards emphasized that financial institutions need immediate, tangible returns. This means each step in the tokenization process must deliver short-term value while setting the foundation for long-term growth.

He also noted that this requirement is a delicate balancing act that Ripple and the broader industry must navigate carefully. Furthermore, Edwards highlighted that financial institutions must play a key role in getting this balance right, as their participation is critical for the success of the tokenization ecosystem.

However, in the near term, Edwards believes that increasing demand and understanding the drivers behind tokenization will be essential. As the utilization of tokenized assets grows—moving beyond just purchasing and holding to broader use cases—the market will start to expand swiftly.

“We’re going to see, once that happens and unlocks, once there’s more utilization of these tokenized assets, rather than just purchase and hold, we’re going to start to see this area ramp up considerably. And it’s going to become critical to the future of the financial system,” he concluded.

Disclaimer

Following the Trust Project guidelines, this feature article presents opinions and perspectives from industry experts or individuals. BeInCrypto is dedicated to transparent reporting, but the views expressed in this article do not necessarily reflect those of BeInCrypto or its staff. Readers should verify information independently and consult with a professional before making decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.

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TradFi To Become Biggest DeFi Customer

Published

56 mins ago

September 19, 2024

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Chainlink co-founder Sergey Nazarov predicts that tokenized real-world assets (RWAs) will soon be more valuable than cryptocurrencies. He points to the increasing involvement of traditional finance in decentralized finance, driven by a growing interest in tokenization.

Nazarov also noted that Chainlink is ready to take advantage of this shift in the blockchain space.

TradFi Interest in Tokenized RWAs To Alter Blockchain

Nazarov anticipates an interconnected world where decentralized finance (DeFi) and TradFi actively transact with each other. Acknowledging the growing interest in tokenized RWAs, he says TradFi would be DeFi’s largest customer.

Speaking at Token2049 in Singapore, Nazarov highlighted DeFi’s ability to generate yield and create reliable markets for RWAs. He urged the industry to prepare for this shift, noting that it’s already happening, driven by asset tokenization. According to Nazarov, blockchain technology is giving TradFi exactly what it needs.

Chainlink co-founder also highlighted how decentralized infrastructures like Chainlink and smart contracts are transforming the digital space by removing the need for traditional counterparty relationships. Instead of relying on human decision-making, automated code ensures outcomes, improving efficiency and reducing risks that traditional finance models often face.

Chainlink co-founder on TradFi, DeFi, and tokenized RWA during Token2049 in Singapore

Nazarov emphasized that this represents a major shift from the current TradFi model, where delays and risks stem from human intervention.

His remarks align with his statements from late August, when he predicted that tokenized real-world assets (RWAs) would surpass crypto in value by 2027, driven by institutional interest and TradFi integration. Currently, the RWA market is growing, with RWA.xyz data showing it is already a $2.22 billion industry.

Tokenized RWA — Tokenized Securities Industry Valuation. Source: RWA.xyz

This development comes as blockchain technology continues to tackle the infrastructure challenges faced by traditional finance, while also opening up new investment opportunities. Blockchain’s ability to streamline workflows and significantly improve settlement times is especially appealing — echoing what Sergey Nazarov explained about the efficiency and certainty that decentralized systems offer.

“TradFi needs all kinds of different data that allow those traditional finance smart contracts to function properly…the Net Asset Value (NAV) data of tokenized funds is an example of a dashboard live on production showing the proof of Reserves of one of the many ETF funds use to prove things about them,” Nazarov said.

Notwithstanding, the road to a complete transition to digital infrastructure is marred with challenges. Among them are legal considerations, identity standards, and data privacy, which would demand careful evaluation with regulatory systems in mind.

Accordingly, TradFi and DeFi players and the broader financial services industry must work to build infrastructures capable of supporting broader tokenization adoption while ensuring security and compliance before Nazarov’s dream can become a reality.

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In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.

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Vitalik Buterin’s Speech, and More

Published

2 hours ago

September 19, 2024

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The Token2049 conference in Singapore has once again proven to be a key event for the crypto industry, showcasing major advancements and collaborations.

The event covered everything from Ethereum’s growth to new partnerships in sports and AI, highlighting how the industry continues to evolve.

Vitalik Sings Ethereum’s Progress: Fees, Speed, Future

Ethereum creator Vitalik Buterin surprised Token2049 attendees by delivering his speech in the form of a concert. Despite the unusual presentation, he shared key updates on Ethereum’s progress.

Buterin highlighted how Layer-2 networks have reduced transaction fees and improved transaction confirmation times to just 5 to 15 seconds.

He also stressed the importance of balancing mainstream adoption with Ethereum’s core values of decentralization and open-source development. Buterin briefly mentioned the ongoing competition with Bitcoin, which currently dominates 58% of the market.

On the second day of Token2049, global crypto exchange Bitget announced a partnership with LaLiga. The collaboration, timed with Bitget’s sixth anniversary, will focus on leveraging blockchain technology alongside LaLiga’s ventures into AI, virtual reality, and the metaverse.

Bitget CEO Gracy Chen highlighted the alliance’s potential to connect with millions of football fans in emerging markets. This follows Bitget’s 2022 partnership with Lionel Messi, reflecting the growing overlap between crypto and sports.

Solana Mobile Unveils ‘Seeker’: Next-Gen Web3 Smartphone

Solana Mobile, a subsidiary of Solana Labs, has unveiled its second-generation Web3 smartphone, called “Seeker”. Previously referred to as “Chapter Two,” Seeker has already secured over 140,000 presale units across 57 countries, according to Emmett Hollyer, Solana Mobile’s general manager. The device is set for release in 2025 and aims to further Web3 mobile development within the Solana ecosystem.

Seeker’s key features include a seed vault wallet, Solana dApp Store 2.0, a Seeker Genesis token, and enhanced hardware. The Early Founder price is $450 until September 21, 2024.

This launch comes after the Saga phone faced initial struggles with sales, but later sold out following a surge in the value of the BONK meme coin.

Chainlink’s Sergey Nazarov Predicts RWA Surge

Chainlink co-founder Sergey Nazarov once again predicted that tokenized real-world assets (RWA) will soon surpass cryptocurrencies in value on Web3. During his keynote at Token2049, he stated that TradFi will become decentralized finance’s (DeFi) largest customer, reshaping the blockchain industry.

Nazarov highlighted Chainlink’s Cross-Chain Interoperability Protocol (CCIP) as crucial in connecting various financial systems. He noted that Chainlink’s oracle network has already enabled $15.49 trillion in transaction value since 2022.

To integrate with blockchain, TradFi needs access to diverse data types and cross-chain connectivity. CCIP offers programmable token transfers, allowing value and data to be included in single transactions.

CertiK, the prominent blockchain security firm, announced a major upgrade to its Web3 services. The company introduced two free community security tools: Token Scan and Wallet Scan, aimed at increasing user asset protection.

Token Scan offers instant security checks for tokens, helping users detect potential scams on networks like Solana. Wallet Scan allows users to assess their wallets for risks such as approval vulnerabilities, and interactions with phishing addresses.

These tools were developed based on CertiK’s extensive experience, including over 70 white hat operations, reporting of 4,000+ security incidents, identification of 115,000 code vulnerabilities, and protection of approximately $360 billion in assets.

Hollywood Veteran Critiques Celebrity Meme Coins

Andrew Saunders, a former Hollywood executive and now Skale’s chief marketing officer, voiced criticism of celebrity-backed meme coins at Token2049. Despite his background in entertainment, Saunders warned against these tokens due to concentrated supply and high risk, likening them to a player-versus-player game where early entry is key to making a profit.

Looking ahead, Saunders predicted a shift in the landscape as crypto regulations become clearer and public understanding improves. He envisioned a future where celebrities use blockchain to connect with fans in a more meaningful way, accessing unique data through an “arm in” model.

As a better alternative to meme coins, Saunders suggested that celebrities develop decentralized applications (DApps) where fans could earn points through social interactions. These points could then be redeemed for exclusive experiences or merchandise.

Solidus Ai Tech and SambaNova Partner for Web 3.0 AI

Solidus Ai Tech has partnered with SambaNova Systems to advance AI in Web 3.0 by integrating SambaNova’s RDU stacks into Solidus Ai Tech’s AI marketplace and European HPC Data Centre. This collaboration promises unprecedented speeds in AI inferencing and fine-tuning.

Set to launch in September, the AI Marketplace will feature advanced AI models powered by SambaNova’s SN40L chip, making high-performance AI accessible across various industries. Paul Farhi, CEO of Solidus Ai Tech, described it as a major leap for AI, while Su Le from SambaNova emphasized the potential for decentralized intelligence in Web 3.0.

Venture Trio Launches Fund for Aptos Ecosystem Growth

MEXC Ventures, Foresight Ventures, and Mirana Ventures have joined forces to establish a new fund aimed at boosting the Aptos ecosystem. This collaborative initiative will focus on supporting promising projects built on the Aptos platform, with a particular emphasis on developing crucial Web3 use cases.

The fund will prioritize projects that leverage Aptos infrastructure, including technologies like Block-STM, and those that facilitate seamless interoperability with key EVM ecosystems. This strategic investment demonstrates strong confidence in Aptos’ technological advancements and future potential.

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How Fed Rate Cut Could Help LINK

Published

3 hours ago

September 19, 2024

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Chainlink’s (LINK) price has risen above $11 following the recent Fed rate cut. This increase has ignited fresh speculation about the coin’s short-term outlook.

In this analysis, BeInCrypto examines the factors contributing to the hike, the potential implications of the rate cut, and what traders can expect from LINK.

Chainlink Key Drivers Want More

According to Santiment, alongside the recent rate cut, Chainlink’s 90-day Mean Coin Age (MCA) has risen. The MCA reflects the average age of tokens in circulation, with a low MCA suggesting that previously inactive tokens are being moved from cold wallets, potentially leading to a sell-off and putting downward pressure on the price.

Conversely, a rising MCA indicates that investors are holding onto their tokens and engaging less in trading activity, often signaling a long-term hold strategy. In Chainlink’s case, the spike in the MCA suggests that many investors are choosing to keep their LINK tokens dormant or moving them into self-custody, reducing selling pressure.

Chainlink 90-Day Mean Coin Age. Source: Santiment

Beyond the rising coin age, the 4-hour LINK/USD chart reveals a surge in the Cumulative Volume Delta (CVD), a key indicator of market sentiment. Each bar on the CVD shows whether the market is dominated by buying or selling activity. Red bars signal selling pressure, which could drive the price down.

In LINK’s case, the chart shows five consecutive green bars, indicating sustained buying pressure. This suggests that the market’s demand for LINK is growing, potentially supporting the continuation of its uptrend.

Chainlink Cumulative Volume Delta. Source: TradingView

LINK Price Prediction: Further Gains

The daily chart shows that Chainlink is holding strong at the $10.02 support level, which played a key role in its recent breakout above the $10.83 resistance. Currently, LINK is trading at $11.30, with no significant resistance in sight to halt the uptrend.

Using Fibonacci retracement levels to assess potential price targets, LINK’s next likely move could take it to $11.86, corresponding to the 38.2% Fibonacci level. If it breaks past this point, the next target could be around $12.98, a level that appears within reach given the current momentum.

Chainlink Daily Analysis. Source: TradingView

However, the cryptocurrency could experience a pullback if it fails to surpass $11.86. If that happens, LINK might drop to $9.25.

Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.

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