XRP-Backed Stablecoin is Here While Top Banks Invest $50 Million in Blockchain Settlement System
- XRP collateralized token called USDX
- Major banks working on “utility settlement coin,” can launch in 2020
XRP has entered the realm of stablecoins as instead of fiat, this new project uses a crypto asset to peg the stablecoin.
Kava Labs is developing an XRP backed stablecoin. The system of this stablecoin named USDX, per the GitHub details is implemented as a Cosmos Zone designed to peg in XRP.
They will be issuing an XRP-collateralized token called USDX and then further maintain its price stability to USD with a decentralized mechanism. The native token of this USDX blockchain is XRS, governance and validation token that is staked by validators who vote on blocks and participate in governance, a mechanism similar to Dai stablecoin of MakerDAO ecosystem.
When it comes to transaction fees, it has been explained that for all USDX transactions such as transferring XRP to others, drawing USDX from a CDP, closing a CDP, and sending USDX between users, it will be split for each block by validators according to a weighted stake.
In order to maintain deflation, XRS tokens will be burned. In this ecosystem, each CDP is subject to a stability fee – having an initial rate of 1% APR – that is paid in native token XRS when the CDP is closed. When these CDPs are closed, the XRS that is paid in stability fees will be burned, decreasing the total outstanding supply of XRS.
“Utility Settlement Coin” Project Could Launch In 2020
Elsewhere, a number of world’s major banks are investing $50 million to create a digital cash system using the blockchain technology to settle financial transactions, reported Reuters.
The project called “utility settlement coin” was first proposed by Swiss bank UBS Group AG and Clearmatics, a London-based technology startup in 2015. The aim is to develop a system to make clearing and settlement in financial systems more efficient.
Dozens of these banks including Barclays PLC, UBS, Suisse Group AG, Banco Santander, HSBC Holdings Plc, State Street Corp, Credit, Deutsche Bank AG, and Bank of New York Mellon Corp are investing in an entity called Fnality that would run the project. The new system could launch in 2020 but the deal is not finalized yet so details may change.
“We are a member of the USC Project and can confirm that the Research & Development phase is coming to an end,”
a spokeswoman for Barclays said in a written statement.
The coin would run on the blockchain that would be backed by cash assets held in central banks and convertible at parity. Banks involved in this previously said they had been in discussion with regulators and central banks to ensure the structure of the project is compliant.