- Ripple`s Chief Technology Officer has advised investors on how to leverage XRP for businesses.
- Some form of protection for the lender would be necessary if the price of XRP drops.
- Ripple`s native token is currently exchanging hands at $0.4555.
David “JoelKatz” Schwartz, the Chief Technology Officer of Ripple, recently became part of a thread on Twitter in which he instructed the cryptocurrency community on using XRP as collateral for a profitable portfolio of companies and real estate.
This is according to Zach Rector, who says his objective has always been to invest XRP in a more significant number of enterprises and properties.
David enters the conversation and explains how to collateralize your XRP. For myself, this has been the plan all along. Leveraging XRP into more businesses and real estate. #XRP pic.twitter.com/kIoSuRyiDZ
— Zach Rector (@ZachRector7) March 27, 2023
This explanation by David is believed to have been hedged by a prominent Twitter personality who asks how XRP can be used as collateral for mortgages. He asks:
… how can it be used as collateral for mortgages etc., if its risk makes it too expensive to be used as collateral. Why would you go and take a 20% mortgage using XRP as collateral when you can get a 5% mortgage using $”
However, in his response, Ripple’s CTO suggests that one reason for collateralizing XRP would be if the holder intended to keep it for an extended period. According to him, such a scenario may make it possible to overcollateralize the loan significantly.
One reason might be if you had a lot of XRP and planned to hold it for a long time anyway. You could overcollateralize the loan by a significant amount. The sticking point would be that to keep the interest rate down, you’d need some way to protect the lender if the …
— David “JoelKatz” Schwartz (@JoelKatz) March 26, 2023
Additionally, to maintain a lower interest rate, some form of protection for the lender would be necessary in case the price of XRP drops. Given that real estate is not particularly liquid, it might be challenging to ensure such protection in the case of a mortgage.
According to David, one possible solution could be to allow the lender to take possession of the XRP if it falls below a particular collateralization rate, which could make the deal more appealing to them.
It is crucial to note that Ripple XRP is trading at $0.4555, a 0.05 increase in the past 24 hours. XRP’s trading volume is now at $1.2 billion, a 25% drop, according to Coinmarketcap data.