- New beta service that will allow the users to source capital on-demand via On-Demand Liquidity (ODL) feature of the company
- Customers using ODL on RippleNet will have the option of purchasing the XRP from Ripple on credit
- ODL will be using XRP tokens as the bridge currency to connect both the receiving and sending users for facilitating the payment.
Ripple, on Thursday, announced the launch of Line of Credit (LoC). As per Ripple’s blog, this will be a new beta service and allow the users to source capital on-demand via On-Demand Liquidity (ODL) feature of the company. A spokesperson from the company said this is the first step they have taken in the direction of the lending space. Based on the results of this, there is a possibility that Ripple will be building a better and robust system in the future.
Who will benefit from this?
At present, the more prominent the company’s balance sheet is, the more comfortable it is for them to scale their business at a rapid speed. The same couldn’t be said for the small and medium-sized enterprises (SMEs), fintech and companies whose only obstacle from growing to incumbent scale is the lack of financial resources. This scenario leads to additional customised credit arrangements with the individual entities adding the extra overhead and management. Ultimately, leading to already stalled growth to even slow and burdensome insufficient processes.
RippleNet’s Line of Credit Service
Ripple’s LoC service will solve the above issues. Customers using ODL on RippleNet will have the option of purchasing the XRP from Ripple on credit. This will allow RippleNet users to avail ODL services irrespective of the sending destination of fiat currency. The service on the borrowed amount will be charged with one fee and no hidden charges. As per Ripple, the service charge will be cheaper than the available credit options and they will provide faster approvals than the traditional means.
How does it Work?
At present Ripple holds $1.55 billion of 6.2 XRP tokens. And the company’s stash accounts for only 6% of the entire XRP supply. This includes 45 billion of XRP in circulation and the 48.6 billion of the escrow accounts.
ODL will be using XRP tokens as the bridge currency to connect both the receiving and sending users for facilitating the payment. This will allow businesses to make transactions even in the scenario of unavailability of foreign exchange for the payment. The transaction money will be converted into XRP and reverted to fiat in a matter of moments.
Ripple aims to break the barrier in the cross-border payments with their Line of Credit launch. The company believes this is one of the many steps that will come in the future of Ripple’s vision of enabling the Internet of Value in the finance sector.
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