DEFIFINANCE

Ripple joins ISDA as a member, officially entering the derivatives market, with the coin price potentially reaching $1,898?

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Ripple joins ISDA as a member, officially entering the derivatives market, with the coin price potentially reaching $1,898?

The payment network company Ripple recently joined the ISDA as a member, and some optimistically predict that its coin price will reach $1,898. What is the significance of ISDA? Does it really have such a profound impact on the price of XRP?

What is ISDA?

The International Swaps and Derivatives Association (ISDA) is a non-profit organization based in New York, USA, established in 1985. Banks or financial counterparties that engage in derivative financial products typically sign a so-called ISDA master agreement in advance. This legal contract, designed by ISDA and widely used in financial centers around the world, serves to regulate the legal and credit risks of the parties involved. Through a neutral role, it designs fair legal terms to reduce transaction costs and facilitate the normal development of the market.

In other words, to trade derivative products with global financial institutions, joining ISDA is necessary.

There are currently only 16 members on the Digital Assets Membership List, including well-known names such as Crypto.com, Algorand, and Digital Asset.

Joining ISDA, XRP Target Price $1,896?

A tweet by Digital PerspectivesPermaBull sparked a series of discussions. It emphasized the potential impact of the collaboration between Ripple and ISDA on the price of XRP, citing Mr. Man's estimation that if Ripple can achieve mainstream adoption, it could bring the price of XRP to $1,896.

According to the calculation:

  • The current global market value of derivative products is $1,000 trillion
  • If Ripple can facilitate 10% of this volume, which is $100 trillion
  • The current total market value of XRP is $34.9 billion
  • It needs to grow 2,865 times to reach $100 trillion
  • Current XRP price is $0.661742
  • 0.661742*2865 = $1,896.23

Guiding Traditional Financial Adoption with the Advantages of ISO and ISDA?

However, observing XRP's recent trend, it only saw a significant increase of 99% in mid-July due to positive news about the SEC lawsuit, and the price has not shown major fluctuations since then.

The above argument is based on simple assumptions and inferences, such as 10% of the trading volume coming from the traditional financial industry wanting to use blockchain technology for derivative financial product transactions. The relationship between trading volume and market value may not be so straightforward. But as the Ripple and SEC lawsuit gradually clarifies, will this early adopter of blockchain in the payment industry have the opportunity to leverage the underlying technology of the XRP Ledger, along with ISO 20022 and ISDA advantages, to gradually guide the adoption of traditional finance?