David Schwartz, Ripple’s CTO, recently shared insights on the company’s roadmap focused on integrating big institutions into DeFi during a podcast at CoinDesk’s Consensus 2024 conference. Schwartz elaborated that Ripple’s strategy involves enabling institutions to create highly regulated financial products, such as traditional loan portfolios, which can interact with DeFi ecosystems. He illustrated this with an example of a regulated financial entity issuing conventional loans for real estate or business. These loans could then be tokenized, allowing them to be traded within a DeFi system.
He emphasized the significance of institutions in mass crypto adoption by drawing parallels with the internet’s evolution. Initially, the internet benefited from government and military use, leading to widespread grassroots adoption. Schwartz used this analogy to underscore that such a synergistic approach leads to a system’s dominance and expansion. In this context, he highlighted the XRP Ledger as a blockchain platform well-suited for these applications.
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Institutions Bringing Users To Crypto
Schwartz suggested that institutional adoption is a stepping stone to grassroots adoption. He admitted Ripple’s initial move in this direction was premature. When institutions adopted Ripple’s payment technology, such as using XRP for transactions, end users remained unaware of the blockchain involvement. Essentially, banks using Ripple’s technology did not bring their customers into the blockchain space.
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He noted that the crypto space now embraces Ripple’s strategy of targeting institutions to drive mass adoption, pointing to stablecoins like USDT as evidence. Stablecoins are as institutional as they get, yet they fuel completely decentralized economies. Schwartz expressed excitement about the trend of institutions not just adopting blockchain technology but also bringing their customers onto the blockchain or enabling blockchain-based activities.
Addressing Regulation
Schwartz also addressed skepticism about regulation. He explained that it is possible to have thoroughly regulated assets like stablecoins, loan portfolios, or tokenized securities. These assets can undergo rigorous KYC and AML processes for every customer, while the underlying tokens representing ownership or collateral can remain completely decentralized.
Ripple’s roadmap aims to integrate big institutions into DeFi by enabling them to create regulated financial products that interact with decentralized ecosystems. This approach, according to Schwartz, can lead to mass crypto adoption similar to how the internet achieved widespread use.
