Kava Labs is developing a stablecoin, USDX, backed by XRP on a Cosmos Zone, which dynamically maintains stability to USD with decentralized mechanisms. Moreover, USDX has a native token, XRS, which is used by validators to vote on blocks and participate in governance.
XRP-backed stablecoin: USDX
Kava Labs is already working with Interledger Protocol [ILP] to bring blockchains, wallets, and exchanges, the interoperability of ILP. Further, Kava Labs is also backed and invested in by Ripple’s initiative, Xpring.
The Co-founder and COO of Kava Labs, Brian Kerr, in a conversation with AMBCrypto said,
“The USDX /xrp peg on our GitHub is merely a specification our developers created in exploration around its feasibility. We have yet to decide if we will strategically pursue this as an initiative for Kava.”
Cosmos is a blockchain that aims to solve the scalability and interoperability problems of many Proof-of-Stake blockchains. USDX will be implemented as a Cosmos Zone designed to peg XRP and issue a XRP-collateralized token, USDX.
Brian Kerr further confirmed that the “specification works and getting XRP into Cosmos is feasible, as well as Cosmos CDPs [Collateralized Debt Positions] with external assets as collateral.”
XRP Community and USDX
The XRP-backed stablecoin was first spotted by a Twitter user, @GermanCryptoInv, after he tweeted,
— Crypto Invest (@GermanCryptoInv) May 16, 2019
Ever since this discovery, the XRP Army/community has been excited about the XRP-backed stablecoin. However, Brian Kerr confirmed that it would require reallocation of huge amounts of resources and a shift in focus from their original project, “Switch App,” which helps users swap cryptocurrencies in the fastest and most secure way, across various blockchains.
He also confirmed that they used XRP as collateral for the stablecoin because of XRP’s liquidity, and because they were “close with the Ripple team so we had a neutral lean to supporting XRP… along with BTC.”
Kerr further added,
“We’re passionate about DeFi, but given the scope of a project like USDX, it would require a lot of resources from us to pursue. For this reason, we are taking it slow and weighing the best course for us. It’s hard because ILP has been a huge focus for us, but with our recent release of the Kava Switch App.”
Is there a Future for USDX?
The COO also confirmed that if Kava Labs proceeded in this direction, they would start with XRP and BTC. They would move from here to other large-cap coins like Bitcoin, Ethereum, XRP, and Binance Coin, etc.
Additionally, Kerr confirmed that they would “love” to implement Binance Coin. However, he stated that Kava Labs,
“haven’t spoken to the binance team yet about it. It’s an incredible idea to add to the BNB DEX, using the CDP of USDX to allow DEX users to effectively do margin trades.”
When asked about Kava Labs’ next steps after the testing for XRP was successful, Kerr added,
“We have a lot more things to consider, such as pieces of the go-to market that would be required. example – partners, getting validators on board to run nodes for the blockchain, hiring to support with the needed resources, initial exchange partners, etc.”
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