Cryptocurrency exchange Binance is launching a token pegged 1:1 with XRP, says Changpeng Zhao, the company’s founder and CEO.
Zhao broke the news on Twitter on Thursday, saying the asset will be “100% (actually over 100%) backed” by XRP.
The new token is designed to give users on Binance’s decentralized crypto exchange, Binance DEX, a way to invest in a crypto asset that will perform exactly the way XRP does.
The CEO says that every transaction can be verified on the blockchain and that he hopes the new asset will actually increase the demand for native XRP tokens.
“The supply would still be ‘in circulation’, just on the Binance Chain. They should be actively used for trading. Nothing changes from the supply perspective. Demand should increase though as there is more use-case/trading going on.”
Some users on Twitter inquired about the purpose of Binance’s new token in relation to XRP itself.
Says Zhao,
“Have you ever asked for more trading pairs against XRP? Native XRP does not have direct trading pairs (especially on any non-custodian DEX) for say, BTC, BNB, MATIC, etc. Well, now it does.”
Binance launched a token pegged to the value of Bitcoin in June.
In the company’s announcement, officials went into greater detail about the purpose of backed assets on their decentralized exchange.
“The main benefit of offering crypto-pegged tokens is that, obviously, this makes available to Binance DEX traders the many coins that have their own blockchains and aren’t native on Binance Chain.
With the increase in the selection of tokens available on Binance DEX, there should be an increase in trading volume and liquidity, This would further increase the utility value of Binance DEX.”
In the long run, Binance says it plans to launch crypto assets pegged to all of the major cryptocurrencies.