The Interledger Foundation (ILF) has extended its Interledger Protocol (ILP) to support organisations that are launching their stablecoins.
Various organisations consider launching digital currencies, but there is currently no infrastructure for these currencies to interact with. The Interledger Protocol provides a solution by enabling simplified transactions across different currencies, regardless of issuer or blockchain, increasing interoperability in emerging payment options.
As Congress advances a regulatory framework for stablecoins, financial institutions and corporations like Fiserv, Mastercard, and Amazon are launching their stablecoins and forming partnerships. However, this approach lacks the necessary interoperability to make stablecoins as widespread as credit cards. Relying on partnerships may lead to a complex network of incompatible stablecoins, hindering simplified commerce and future innovation.
The Interledger Protocol (ILP) is a free, open-source protocol modeled on TCP/IP, facilitating quick money transfers across borders and silos globally. Developed with input from financial service providers and standards bodies like the World Wide Web Consortium, ILP supports innovative use cases and is poised to drive the next era of digital currency.
Through the Interledger Protocol (ILP), organisations that issue stablecoins can connect to a network, allowing them to accept payments and transact with other third-party stablecoins.
Key capabilities of the solution
This framework offers several benefits:
- Eliminate the need for one-off partnerships: by promoting widespread interoperability, companies will no longer need to establish incremental connections with other providers through exclusive agreements;
- Bridge the gap between stablecoins and fiat currency: the true potential of tokenised assets can only be unlocked when they can transact with fiat currencies, which requires both to operate on the same network;
- Establish a global unified standard for stablecoin payments: this interoperable network serves as a singular global solution, minimising friction in cross-border stablecoin transactions and expanding the applicability and adoption of stablecoins;
- Build interoperability from the start: instead of issuing a stablecoin and subsequently considering interoperability, organisations can design their stablecoins with interoperability in mind from the very beginning.
This new global solution aims to increase access to the digital economy. It was developed from ILF’s efforts in 40 countries, focusing on creating interoperable payment connections among individuals, businesses, financial institutions, and governments.
