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Misil

XRP-Native token to ILP

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Just now, zerpdigger said:

it depends on what you're trying to do... that's the point... if xrp is part of a hop, it's 4 secs, xbt is up tp ~1hr

but in your example, you'd not use xbt anyway... no point, as EUR/USD has liquidity

You can replace EUR/USD with MXN/USD or whatever, and in my example is not using XBT, but an XBT IOU, which transaction takes <1s because it's on an exchange. You achieve settlement on the initial and final ledger, you have a very fast payment and high liquidity.

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13 minutes ago, tulo said:

You can replace EUR/USD with MXN/USD or whatever, and in my example is not using XBT, but an XBT IOU, which transaction takes <1s because it's on an exchange. You achieve settlement on the initial and final ledger, you have a very fast payment and high liquidity.

no, you can't -- that's the whole point; you DON'T have liquidity everywhere, that's the purpose of xrp

if you're a market maker, liquidity provider, do you really want your cash trapped in local reserves, wiring everywhere?! or have 4 secs to make xrp go to any willing exchange, to provide liquidity to settle funds in any currency?

i think you have the route back to front

if parties decide to settle up in XRP, all they need is localised liquidity in their country's exchange(s) -- and if they are concerned about an exchange, XRP only takes 4 secs between them...

Edited by zerpdigger
typos

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On 11/1/2017 at 2:19 PM, JoelKatz said:

Almost every company is vulnerable to someone else who attempts to do exactly what they're doing and manages to do it better. This is much easier said than done.

"Know How" vs "Do How" ... The Ripple team has come out with very well thought through, industry leading ideas and vision 2-3 maybe 4+ times over the past few years. 

As an outsider, I look at the HR situation of this budding industry as being comprised of a few dozen fiefdoms, in which talent has coalesced. I also get the sense that some re-evaluation by talent is beginning, regarding if their current fiefdom is their best option. This may be due to "a rising tide floats all boats" effect, idk.

On 11/1/2017 at 5:53 AM, Misil said:

Could someone provide some thoughts on the benefits of using XRP within Ripple platforms? It's been said that it provides further savings to transaction costs... but how is this achieved? 

My point is that if the argument is that it provides liquidity in the market, this is not a technical characteristic, so if one company wants to copy the model, just needs to do an ICO and launch another token?

There are a few benefits, financially speaking and depending on which type of actor/party you are, and how you are interacting with XRP.

  • Speed
  • Cost savings
  • anti spam
  • trustless, no counterparty risk, "etc"
  • reduce levels of treasury capital allocated to international markets where you do business
  • earning a spread, MM, etc
  • legal flexibility per jurisdiction for XRP as a digital "whatever"
  • and enabling other financial market dynamic stuff, having to do reducing liquidity risks, as well as enabling leverage and compliance risk management options
  • ...dont forget about IOUs & Rippling, which no longer get a lot of attention, but enable a lot of potential. 

I wish I could hear their pitch to banks, but they have put enough out publicly that you can sort of read between the lines. Most real deal innovations end up being understood to have reduced some real world risk. Sometimes the innovators dont even realize they are reducing a risk, and think they are making something better, faster, cheaper. Given that we are talking about financial markets and professionals with the Ripple Net use case, I think the focus on risk reduction and management will continue to become better articulated.

 

Edited by KarmaCoverage

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I have tried to understand how XRP works in the XRapid solution and how ILP with native XRP differs from say XLM or BTC but I do get lost in the details...  One takeaway I've collected is that XRP is the sole 'native' currency for ILP but I don't understand how that plays out.  I did read the market makers explanation that I think tulo wrote...  It was excellent and detailed but maybe I need to read it again.

I was hoping that @zerpdigger and @tulo would keep going maybe with @JoelKatz adding in the fine details and maybe I would finally grok it all...   alas they stopped.     :( 

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11 hours ago, Tinyaccount said:

I have tried to understand how XRP works in the XRapid solution and how ILP with native XRP differs from say XLM or BTC but I do get lost in the details...  One takeaway I've collected is that XRP is the sole 'native' currency for ILP but I don't understand how that plays out.  I did read the market makers explanation that I think tulo wrote...  It was excellent and detailed but maybe I need to read it again.

I was hoping that @zerpdigger and @tulo would keep going maybe with @JoelKatz adding in the fine details and maybe I would finally grok it all...   alas they stopped.     :( 

i'd love to thrash out a thread with @tulo -- he's a great guy and keeps us on our toes, and maybe he's right, and if so i'd wanna know! because then i could dump my lovely zerps...

but basically (again, massively simplified) my point was to highlight xrp's role is as a settlement mechanism in-between liquidity pools

that's its key advantage, since no other digital asset can settle so fast (yet) ; iou's are exactly that, issuances that need another step to settle, and getting them e.g. to/from exchanges into accounts is bloody hard – and slow!

now we also have ILP, and let's say we can now settle directly between bank ledgers -- this can only occur where there's sufficient liquidity for the pair(s), else we need a bridge... but if the bridge also settles i.e. isn't an IOU, then parties can conduct transfers of value and do the settling of fiat afterwards

that bridge asset needs fast guaranteed settlement, because the asset might need to be moved into other liquidity pools in other areas to meet demand -- fiat can't do that, because you need permissions/accounts/nostro etc

also rather than an institution having to serve so many markets and thus needing to hold god knows how many foreign assets...

so without cryptocurrency you're holding e.g. exchange IOUs, or whatever, and trying to get them here then there, then settle (you can't hold everything on an exchange!), then withdraw to X account(s) (fees, slow?, uptime, bla bla)... and move between all kinds of currencies too ; so that's where XRP is the winner, it's an off-road vehicle, take it where you like

so if you want to serve liquidity in, say, japan, from, say, india (or USA to Mexico!)... maybe there's no direct/liquid route... so instead liquidity providers can hold part of their "portfolio" in XRP, and send it to whomever can provide liquidity to enter/exit on a local exchange or to an ILP-enabled ledger (but you still need the exchange!)

so if a bank wants to open up remittance avenues from india to japan or other smaller countries, they can source liquidity ON DEMAND by settling up in XRP, then the rest of the action just takes place afterwards at a local exchange/account -- point being the two parties can settle not in INR/JPY... but XRP, then after the settlement of value and they're both happy, they can complete the leg in whatever they need to

tulo (i love the guy but) was a bit sneaky because in the examples provided he used TWO corridors: EUR/USD and USD/MXN -- not at all the same context!!! this is a very complicated issue and depends on: locations, accounts, ILP/standard ledger, cross-currency?, cross-border?, fees, etc etc etc

the first example already HAS liquidity (USD/EUR), so XRP is minimally useful if at all! the second does not have liquidity, so there's a role to play... xrp can enter as a liquidity tool so that remittances from the States to Mexico can occur at a reasonable rate via whatever exchanges pop up to offer the service... remember, ILP does NOT help in such a situation (MAYBE enables settlement more smoothly between exchange and bank?), and only works between TRUSTED parties on the network anyway... XRP is a "trust-less" solution precisely because the settlement does NOT NEED ACCOUNTS! location agnostic, it's done on-ledger in 4 secs

Edited by zerpdigger

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from ripple's PDF 'ripple_liquidity_one_pager.pdf'

Quote

Settlement Through Digital Assets (XRP)
Future Release
This arrangement allows for the transacting banks to settle payments using XRP as a digital asset. XRP’s reach into exotic corridors and average daily trading volume higher than most exotic currencies, makes it an ideal bridge asset for settling transactions between banks. In this arrangement, each bank holds XRP as a fungible liquidity pool that can be used for payments within a number of exotic corridors without the need to hold nostro accounts in those currencies. With XRP eliminating the need for banks to have nostro accounts or foreign currency exposure, this arrangement is ideal to be used for exotic corridors.

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13 hours ago, Tinyaccount said:

One takeaway I've collected is that XRP is the sole 'native' currency for ILP but I don't understand how that plays out.

XRP is absolutely not the sole native currency for ILP. ILP is a protocol which is ledger agnostic, i.e. all the ledgers (including XRPLedger) are considered the same. XRPLedger is already ILP enabled, but there are other ledgers that are ILP enabled.

Said so, about xRapid:

Actually we miss lots of info to understand how xRapid will use XRP. But we can make some assumptions. One assumption is that ILP (or the private ILP version) is used. With this assumption I see 2 scenarios:

  1. XRP liquidity is used directly with XRPLedger. In this case some connectors (market makers or liquidity providers) have to publish some quotes between other ledgers and XRPLedger. Connectors must have an account in both XRPLedger and the other ledger they want to connect. For example suppose that BoA is ILP enabled. A connector (can be BoA itself) can publish "offers" between USD.BoA and XRP.native. In this case we would see escrow transactions on XRPLedger. 
  2. XRP liquidity is used in exchanges. The ILP connectors have to publish quotes between an external ledger and the exchange ledger. Example: for a MXN USD payment Bitso and Bitstamp exchanges are used.Bitso publish on ILP the MXN:XRP offer it has on their private orderbooks. Bitstamp publish on ILP the XRP:USD offers it has on it's private ledger. Suppose someone want to send a MXN-->USD payment from banco de mexico to BoA. Now things can get complex and I don't know the best implementation. We could have connectors between MXN.BdM and MXN.Bitso, between USD.Bitstamp and USD.BoA and XRP.Bitso and XRP.Bitstamp. In this case you'll have so many hops that XRP will become probably too expensive. But actually we need more details from Ripple. In this case using XRP or BTC or whatever token is the same, since the "token" is used only in private ledgers, i.e. there are very fast transactions and the advantages of XRP become 0.

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Thanks guys for commenting and educating.  I thought I could remember a document I read ( linked to by @thetamind if I recall correctly ) that said that ONLY xrp would be 'native' to the ILP.   But reading your replies, and going back through threads,  I can't find it and,  as you've indicated....   that appears to be incorrect.

So I'm left with the impression that ILP will connect all the walled gardens and that any suitable crypto can be used as the value transfer medium and that settlement occurs via ILP and the crypto coin.

So XRP?   It seems that @JoelKatz and others have made the case that XRP is the only one that provides the speed, governance, reliability, low cost etc.  That's probably true,  but it's hard to argue that a similar situation to BETAMAX cannot arise....    ie XRP is the better choice,  but enterprises might choose XLM or BTC based on other factors,  and end up with a nearly ok system but not as good as it could have been.   I hope not.  Some probably will... but I was hoping it would only be a small minority.

I know that Ripple have onboarded 100+ banks and that more are coming...   so XRP will definitely be in the space,  but it may not be the juggernaut I had hoped for....

If my assessment is in error I would love, love, love to hear otherwise.  :) 

 

 

 

 

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8 hours ago, Tinyaccount said:

Thanks guys for commenting and educating.  I thought I could remember a document I read ( linked to by @thetamind if I recall correctly ) that said that ONLY xrp would be 'native' to the ILP.   But reading your replies, and going back through threads,  I can't find it and,  as you've indicated....   that appears to be incorrect.

So I'm left with the impression that ILP will connect all the walled gardens and that any suitable crypto can be used as the value transfer medium and that settlement occurs via ILP and the crypto coin.

So XRP?   It seems that @JoelKatz and others have made the case that XRP is the only one that provides the speed, governance, reliability, low cost etc.  That's probably true,  but it's hard to argue that a similar situation to BETAMAX cannot arise....    ie XRP is the better choice,  but enterprises might choose XLM or BTC based on other factors,  and end up with a nearly ok system but not as good as it could have been.   I hope not.  Some probably will... but I was hoping it would only be a small minority.

I know that Ripple have onboarded 100+ banks and that more are coming...   so XRP will definitely be in the space,  but it may not be the juggernaut I had hoped for....

If my assessment is in error I would love, love, love to hear otherwise.  :) 

 

 

 

 

@JoelKatz, can you please share your insight on this last comment of @Tinyaccount ?

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9 hours ago, Tinyaccount said:

So XRP?   It seems that @JoelKatz and others have made the case that XRP is the only one that provides the speed, governance, reliability, low cost etc. 

As already discussed here 

XRP might not be the best bridge currency for its technology itself. In fact we have seen an increasing number of DLT (red belly, hashgraph) which could be better than XRP in terms of speed, scalability and decentralization, but XRP has a huge advantage, i.e. it is backed by a company which has lots of money to promote XRP and it's 3-4 years ahead any possible competitors, being already in contact with hundreds of banks, FIs, companies and knowing very well regulations, laws etc.

I'd say XRP is in a good position but since the market is so big and with so much money involved I will expect more competitors to kick in.

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30 minutes ago, tulo said:

 

XRP might not be the best bridge currency for its technology itself.

What do you mean by this?

For my understanding, the greatest advantage of XRP for its technology, beside acting as cheap and counterparty riskfree asset, is its tight integration in its own ledger with the build-in best pathfinding Xchange for IOU's what are whatever value representing. The integrated Xchange is what sets it apart ...

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