The adoption of stablecoins has increased in recent years. In 2021, stablecoins such as Tether were utilized in 13% of crypto payments made via BitPay (a Bitcoin Payment Service Provider). Additionally, from $29.38 billion in January 2021 to more than $182.14 billion by March 31, 2022, the total amount of stablecoins in circulation rose.
Stablecoins are finding product-market fit and institutional acceptance, according to The Block Research’s 2023 Digital Asset Outlook research, with total use breaking new milestones in 2022. Annual stablecoin adjusted transaction volume (i.e. a payment flow from one address to another on a public blockchain) will surpass $7.2 trillion in 2022, marking a 19% increase year on year.
What are stablecoins?
Whereas CBDCs are digital currencies issued and maintained by the government, stablecoins (in many circumstances) are developed, controlled, or regulated by private businesses rather than a country’s central bank. Because stablecoins are tied to a significant currency, such as the US dollar, they often have little to no volatility (thus the name) in addition to the volatility of the currency to which they are tethered. This also means that demand for stablecoins stays strong even amid market swings.
Yet, stablecoins tied to the USD have experienced the most traction. Euro-backed stablecoins have the highest market cap of any non-USD stablecoin, with a market size of €581 million (USD 605 million), compared to a total market cap of $145 billion or more for all fiat-backed stablecoins.
Stablecoins tied to other fiat currencies, on the other hand, will continue to gain traction in the future years as legislative frameworks emerge, notably in Europe, Latin America, and Asia.
Advancement of Stablecoins in Australia
Novatti Group Limited, a global financial company that enables companies to pay and be paid, has announced that their 1:1 fiat-backed stablecoin, AUDD, is now available on the XRP Ledger (XRPL), an open-source, energy-efficient, and decentralized blockchain.
Through the XRPL, AUDD will be accessible for a direct 1:1 swap of fiat Australian Dollars. The XRPL is ideal for the scalability of stablecoins and asset tokenization since transactions there are rapid (3-5 seconds per transaction) and affordable (fractions of a cent per transaction).
Because AUDD is now functioning on the XRPL, users all over the globe may use it to make payments and trade with other XRP-based tokens via the native decentralized exchange (DEX). Users can access AUDD with any wallet that supports XRPL.
Novatti has successfully employed XRP, the XRPL’s native digital currency, for cross-border transactions with its most recent deployment. To move money between Australia and the Philippines in April 2021, Novatti used the Ripple payments network, using XRP as a means of exchange between the two fiat currencies. Since using Ripple’s payments technology, Novatti has been able to expand its business into 58 countries and handle billions of dollars in yearly transaction value. Additionally, AUDD will be integrated into Novatti’s current lineup of payment solutions, where it will be utilized for remittance, payment gateway, trading pairs, and stablecoin-as-a-service. The launch of a stablecoin backed by money and powered by the XRP Ledger was a logical next step for the business.
“Novatti is excited to continue the journey in bringing our stablecoin roadmap to life with the goal to provide faster, more secure payments with lower friction costs to consumers. By deploying AUDD on the XRP Ledger, we will be able to capture the growing demand for digital currencies and create new revenue streams for our business, while delivering on our promise to make our solution available to multiple networks.”
Peter Cook, CEO, Novatti Group
Bringing Fiat into the network is only the beginning.
Novatti’s involvement in the CBDC project of the RBA and Digital Finance CRC, which looks at the potential applications of an Australian central bank digital currency, has helped stablecoin adoption gain traction.
CBDCs and stablecoins are a very fascinating and significant use case for real-world asset tokenization, offering companies and financial institutions improved data management, security, and stability. Indeed, data from Ripple’s 2023 New Value Report indicate that finance leaders at organizations and financial institutions are as confident in cryptocurrencies, stablecoins, and CBDCs as they are in traditional currency.
This is a critical turning point on the path to the Internet of Value. Companies will be able to tap into new markets, open up new income streams, and offer new financial services to clients as more assets are tokenized, global liquidity grows, and greater financial inclusion attracts more participants.
