Ripple’s Vision for DeFi: An Interview with Ripple’s Head of DeFi Product Jasmine Cooper

In a recent interview, Jasmine Leeson-Gabriele, Head of DeFi at Ripple, discussed the latest developments in decentralized finance (DeFi) on the XRP Ledger. She highlighted several strategic partnerships and emerging trends that are bolstering DeFi growth on the platform.

Jasmine Cooper, heading Ripple‘s DeFi and tokenization efforts as the Head of Product at RippleX, drives the development of infrastructure, tools, services, and programs for developers on the XRP Ledger (XRPL) to explore new crypto applications. With a distinguished background in fintech, including managing mortgage technology and founding a financial health company, Jasmine’s expertise is indisputable.

As a researcher conducting an exclusive interview with Mike Ermolaev, I delved into Ripple’s strategic initiatives in the decentralized finance (DeFi) sector. Notable aspects of our discussion revolved around simplifying user onboarding processes, fostering cross-chain compatibility, bridging the gap between Traditional Finance (TradFI) and DeFi, introducing a new stablecoin, and forging fresh partnerships. This conversation is brought to you by GoMining, as part of our continuous GoCrypto interview series.

Expanding DeFi Adoption on the XRP Ledger

As a crypto investor in Ripple, I can tell you that Jasmine Cooper revealed some exciting plans for expanding the use of Decentralized Finance (DeFi) on the XRP Ledger (XRPL). To accomplish this, Ripple intends to utilize the platform’s unique strengths and enhance its capabilities to cater to the increasing industry demands.

Jasmine went on to share that Ripple and the XRPL community are working diligently to enhance the platform’s DeFi capabilities. They are in the process of creating new features, expanding upon the original ones. Some of these additions include:

As an analyst, I would highlight the significance of interoperability and scalability in propelling the mass adoption of Decentralized Finance (DeFi). In response to this demand, Ripple, the leading payment solutions provider, has teamed up with Peersyst to create a sidechain based on Cosmos-SDK, complete with Ethereum Virtual Machine (EVM) compatibility through EVMos. This collaboration ensures easy access to XRP Ledger’s (XRPL) features while fostering interoperability with various other blockchain ecosystems.

I, as an analyst, believe that with the future of blockchain technology leaning towards a multi-chain structure, Ripple’s emphasis on interoperability and the XRPL’s capability to process transactions rapidly at minimal costs makes it a pivotal figure in the expanding Decentralized Finance (DeFi) sector. The incorporation of Axelar network into the XRPL signifies a noteworthy advancement in the development of blockchain interoperability and functionality, paving the way for novel innovations and fostering a more unified and interconnected blockchain ecosystem.

Enhancing User Onboarding with Sponsored Fees

Concerning the proposed method for sponsored fees and reserve transactions, Jasmine explained that this new approach aims to streamline the onboarding experience.

As a researcher investigating the topic of account reserves in the context of XRP transactions, I’d like to propose an alternative method for handling sponsored fees and reserves through relayed transactions. Instead of offering XRP as free gifts for account reserves, which can be exploited, we suggest treating these reserves as loans during their usage. By implementing this approach, we aim to mitigate the risk of individuals creating multiple accounts to claim 10 XRP reserves and then deleting them to reclaim an 8 XRP refund, effectively obtaining free funds. This vulnerability also applies to object reserves. Our proposed solution is to ensure that the 8 XRP return to the project, thereby eliminating any potential for such exploitation.
Jasmine noted, “The benefactor’s funds are protected from misuse within the blockchain, ensuring their approval is obtained before any sponsorship is utilized. Our main concern for potential misconduct is if the beneficiary fails to reimburse the benefactor upon request, especially when they lack sufficient XRP to do so. Such a situation could create complications, but the safeguards in place largely prevent abuse and facilitate a smoother onboarding process.”
Leveraging XChainBridge for Cross-Chain Asset Transfers

Ripple intends to use XChainBridge technology for seamless transfer of assets between the XRP Ledger (XRPL) and Ethereum Virtual Machine (EVM)-compatible sidechains, thereby improving their connectivity.

“Jasmine announced that the XChainBridge is a proposed modification intended to simplify the exchange of assets between the XRPL and other compatible blockchain networks, including EVM sidechains. The intricacies of its execution and the significance of (w)XRP are yet to be clarified. Further insights into the features of XChainBridge and its connection to (w)XRP will be shared at APEX.”

Introducing Managed Single Asset Tokenized Pool

With reference to the Managed Single Asset Tokenized Pool proposition, Jasmine explained it as a native XRPL asset vault modeled after ERC-4626, which allows users to deposit just one type of asset into a communal pool while monitoring their proportional ownership shares. This functionality is particularly suitable for applications such as lending, staking, and escrow.

“The XLS-65d proposal, which is called the Managed Single Asset Tokenized Pool on XRP Ledger, functions as a natively built asset vault inspired by ERC-4626. It allows for the secure storage of a single asset within a pool while keeping track of liquidity providers’ ownership shares. This feature offers flexibility with redemptions and even the creation of new assets, making it perfectly suited for applications such as lending, staking, and escrow.”
As a crypto investor, I can explain that the management of certain features in this protocol can be delegated to an account through its built-in functions. The Pool Delegate plays a crucial role in this administration process, ensuring both efficient and secure pool management. Although XLS-65d lays the groundwork, the application of these concepts in lending protocols like XLS-66d adds specific security measures that align the delegate’s interests with those of us investors – for instance, through first-loss capital protection.

The protocol provides the required instruments and choices for ensuring safety and adherence. However, it is the developers who hold the final accountability for the security and performance of the offered services through their applications.

Bridging Traditional Finance with DeFi

Jasmine highlighted the benefits that Decentralized Finance (DeFi) holds over Traditional Finance (TradFi). These advantages include greater transparency, easier access, swift transaction processing, and continuous operation around the clock.

As an analyst, I would put it this way: “The technological advantages are undeniable in the FinTech sphere. However, Traditional Finance (TradFi) holds immense value in aspects such as trust, customer relationships, regulatory compliance, access to capital, and more. By merging these two distinctive approaches, we can build a robust financial system that amplifies the strengths of both, benefiting all parties involved.”

Large private equity firms employ methods like XLS-66d lending protocols to amass funds on the blockchain, thereby reducing their operational expenses and expanding their reach to a broader range of investors.

“Jasmine explained that investors now have the opportunity to tap into an exclusive asset class that was once restricted to large endowments and wealthy individuals with substantial assets. This development brings benefits for both parties.”

She also brought up the topic of tokenized treasury bills, which are growing in value due to the influx of capital moving onto the XRP Ledger. These digital securities offer attractive returns on otherwise idle funds, making them an appealing option with their low transaction costs and swift processing times.

Strategic DeFi Partnerships

Jasmine brought attention to several key collaborations that have notably advanced Decentralized Finance (DeFi) growth on the XRP Ledger. Notable among these are Zoniqx, Axelar, and Orchestra.

“Zoniqx significantly contributes to the process of converting real-world assets into digital tokens on the XRP Ledger (XRPL). As a result, it enables the creation of tokenized versions of securities like bonds, treasuries, and other financial instruments. By joining forces, we aim to increase market liquidity, expedite settlement processes, and decrease transaction fees, making the XRPL an attractive option for conventional financial institutions looking to incorporate blockchain technology into their operations.”

During this time, Axelar’s connection to the XRPL leads to unprecedented cross-chain compatibility, linking the XRPL with more than fifty other blockchains as mentioned by Jasmine.

“The ability to communicate and transfer assets seamlessly across different blockchains through XRPL, enhanced by Axelar’s functionality, significantly boosts XRPL’s adaptability and usefulness in Decentralized Finance (DeFi) applications. By facilitating interactions with various blockchain networks, Axelar keeps XRPL a versatile and interconnected platform that can accommodate a multitude of DeFi projects.”

Using the built-in automated market making feature of the XRPL (XRP Ledger), Orchestra Finance aims to deliver swift and economical decentralized exchange trading, staking, and additional functionalities on their platform.

Jasmine remarked, “They’re still enhancing and broadening the scope of their decentralized application (dApp) on XRPL to provide top-tier, permissionless DeFi services to its users.”

“Further collaborations are set to be announced in the near future, with details emerging at the upcoming XRP Ledger Apex conference from June 11-13.”

Emerging DeFi Trends on XRPL

Jasmine brought attention to various up-and-coming trends in Decentralized Finance (DeFi) on the XRP Ledger, as she saw it. One significant trend she noted was the growing interest in On-chain Real World Assets, specifically Treasury bills (T-bills).

“With the shift towards digital assets in traditional finance, the speedy, cost-effective transactions and robust security of XRPL become increasingly valuable for trading securities such as T-bills on-chain. Ripple and the XRPL community are actively enhancing the XRPL infrastructure to ensure smooth compatibility with conventional financial systems, thereby increasing liquidity and accessibility,” she elaborated.
“Jasmine emphasized the significance of enhanced interoperability. By collaborating with Axelar, Ripple’s XRPL network is now connected to over 55 other blockchains, enabling effortless cross-chain communication and asset transfers. This connection keeps XRPL adaptable and well-integrated within the larger blockchain community.”

In essence, Ripple seems to be gearing up for these new developments by improving XRP Ledger’s foundation, expanding connectivity between systems, and creating sophisticated Decentralized Finance (DeFi) solutions tailored for institutional investors.

Launching a Stablecoin

As a crypto investor, I was intrigued by Jasmine’s insights into Ripple’s upcoming stablecoin launch timeline. She shed light on the unique strategies Ripple intends to employ in differentiating its US dollar-backed digital currency from established competitors such as Tether and Circle. By sharing these perspectives, I gained a deeper understanding of the competitive landscape and how each player aims to stand out in the crowded stablecoin market.

Based on her perspective, Ripple strives to instill stability and legitimacy through a compliance-focused approach. As such, it is an excellent contender for introducing a USD-pegged stablecoin onto the XRP Ledger and Ethereum networks.

Jasmine expressed that the Ripple stablecoin is anticipated to be employed not only in institutional and Decentralized Finance (DeFi) applications, but also within our payment system.
“Moving forward, we’re enhancing our payments product with the goal of making Ripple Payments the swift and effective cross-border payment choice for businesses, irrespective of currency, time zone, or destination – no prior knowledge of cryptocurrency and blockchain is required,” she stated.

As an analyst, I have gathered that the company intends to link its stablecoin with XRP, the native cryptocurrency of Ripple, to enhance crypto liquidity for increased cross-border payment requirements. This connection is expected to facilitate essential on and off ramps, thereby supporting global scale.

Jasmine shared that we have the flexibility to use various types of assets such as cryptocurrencies, stablecoins, fiat money, or a mix, in order to deliver an optimal payment experience for our customers, considering the specific region, time limitations, and related costs.
“Consider, for instance, that when dealing with a G7 currency, it may be most suitable to employ either fiat or a stablecoin. However, if you need to transfer funds during non-business hours, such as late at night or during religious holidays like Ramadan or Christmas morning, cryptocurrencies offer the advantage of instant and cost-effective transactions.”
Starting with a select group of customers, we’re currently trials run for integrating stablecoins into our payment processing system. Depending on demand and customer preferences, we plan to add more stablecoins in the future. Over time, as XRP Ledger gains more liquidity and asset variety, we envision the ability to connect directly to decentralized exchanges via Ripple Payments for cross-border transactions. This could potentially lead to substantial cost savings and faster transaction times compared to traditional methods.

2024-05-28 14:56