Stablecoin adoption has been on the rise over the past few years. In 2021,13% of crypto payments made on BitPay (a Bitcoin Payment Service Provider) used stablecoins like Tether. And total circulating stablecoin supply grew from $29.38 billion in January 2021 to over $182.14 billion by March 31, 2022.
According to The Block Research’s 2023 Digital Asset Outlook report, stablecoins are finding product-market fit and institutional adoption, with overall usage setting new records in 2022. Annual stablecoin adjusted transaction volume (i.e. a payment flow from one address to another on a public blockchain) crossed $7.2 trillion in 2022, representing 19% YoY volume growth.
What is a Stablecoin?
Where CBDCs are digital currencies issued and managed by the government, stablecoins (in many cases) are issued and managed by private entities rather than created, controlled or regulated by a country’s central bank. Because stablecoins are pegged to a major currency, for example, the US dollar, they usually have little-to-no volatility (hence the name) beyond the volatility of the currency they are pegged to. This also means stablecoin demand remains high even during market fluctuations.
Stablecoins pegged to the USD have seen the most traction to-date. Euro-backed stablecoins make up the largest group of non-USD stablecoins with a market cap of €581 million (~$605 million USD), compared to a $145B+ total market cap of all fiat-backed stablecoins. That being said, stablecoins pegged to other fiat currencies will continue to gain adoption in the coming years as regulatory frameworks continue to materialize, particularly in Europe, Latin America and Asia.
Stablecoin Advancement in Australia
Novatti Group Limited, a leading fintech enabling businesses to pay and be paid, announced its 1:1 fiat-backed stablecoin, AUDD, is now live on the XRP Ledger (XRPL) — an open-source, energy efficient, and decentralized blockchain.
AUDD will be available for a direct 1:1 swap of fiat Australian Dollars via the XRPL. Transactions on the XRPL are both fast (~3-5 seconds per transaction) and low cost (fractions of a cent per transaction), making it ideally suited to support stablecoins and asset tokenization at scale.
AUDD’s functionality on the XRPL means users around the world can utilize AUDD to make payments and trade with other XRP-based tokens via the native decentralized exchange (DEX). User accounts will be able to access AUDD through any XRPL-enabled wallet.
This new deployment marks a further strengthening of Novatti’s success with using the XRPL’s native digital asset, XRP, for cross-border transactions. In April 2021, Novatti tapped Ripple’s payments solution, which also leverages XRP as a bridge currency between two fiat currencies, for cross-border remittances between Australia and the Philippines. Since using Ripple’s payments solution, Novatti has now been able to expand their business into 58 countries, and process billions in annual transaction value. AUDD is also being integrated into Novatti’s existing suite of payment solutions and is designed to meet a range of use cases, including remittance, payment gateway, trading pair and Stablecoin-as-a-Service. The launch of a fiat-backed stablecoin powered by the XRP Ledger was a natural next step in the company’s evolution.
“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 On-Chain is Just the Beginning
The growing momentum of stablecoin usage follows Novatti’s participation in the RBA and Digital Finance CRC’s CBDC pilot, which explores the use cases for a central bank digital currency in Australia.
CBDCs and stablecoins are an extremely exciting and important use case for real-world asset tokenization, with the promise of better data management, security and stability for enterprises and financial institutions. In fact, findings from Ripple’s 2023 New Value Report point to finance leaders at enterprises and financial institutions being as or more confident in cryptocurrencies, stablecoins, and CBDCs to meet their business needs compared to traditional fiat.
This marks an important inflection point in the journey toward the Internet of Value. As more and more assets are tokenized; global liquidity increases; and greater financial inclusion brings in more participants, companies will be able to tap into new markets, open up new revenue streams, and offer new financial services to customers.
Download Ripple’s 2023 New Value Report: Crypto Trends in Business and Beyond for additional insights.
