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Mhizha_Man

How does xRapid provide liquidity?

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Hi Ripple community

Im interested in creating a remittance based business and am trying to figure out how xRapid provides liquidity. The reason i ask is that the destination country has no exchange that lists XRP.. so no way of converting the XRP into fiat or into another cryptocurrency. 

So how would xRapid solve this issue? 

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1 hour ago, Mhizha_Man said:

Hi Ripple community

Im interested in creating a remittance based business and am trying to figure out how xRapid provides liquidity. The reason i ask is that the destination country has no exchange that lists XRP.. so no way of converting the XRP into fiat or into another cryptocurrency. 

So how would xRapid solve this issue? 

Xrapid solves this problem by using XRP liquidity providers. The liquidity providers and marketmakers use, lock and transact the best available fiat-pair for the transaction. All this is done in +/- 4 seconde. On the Ripple website you can find a complete explanation of hoe it works. Just in case I made a mistake... www.ripple.com - Solutions - Source Liquidity :beach:

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13 minutes ago, cryptoxrp said:

Xrapid solves this problem by using XRP liquidity providers. The liquidity providers and marketmakers use, lock and transact the best available fiat-pair for the transaction. All this is done in +/- 4 seconde. On the Ripple website you can find a complete explanation of hoe it works. Just in case I made a mistake... www.ripple.com - Solutions - Source Liquidity :beach:

So vague and useless comment.

Who are the market makers? How do they provide the real liquidity? Do they hold XRP? how they cover the risks/costs for the volatility of XRP? do they use exchanges, do they operate via a FI? Where they trade the FIAT for XRP?

There are so many open questions out there...the point is that Xrapid doesn't exist, or it is not actively (and publicly) used right now. If someone is using it, we don't know and we don't know the details. See Cuallix example: they should be the first to use Xrapid, but none know how XRP are used in the chain.

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2 minutes ago, tulo said:

So vague and useless comment.

Who are the market makers? How do they provide the real liquidity? Do they hold XRP? how they cover the risks/costs for the volatility of XRP? do they use exchanges, do they operate via a FI? Where they trade the FIAT for XRP?

There are so many open questions out there...the point is that Xrapid doesn't exist, or it is not actively (and publicly) used right now. If someone is using it, we don't know and we don't know the details. See Cuallix example: they should be the first to use Xrapid, but none know how XRP are used in the chain.

@tulo, please relax. If you want the technical details then ask @JoelKatz . As far as I am concerned we should all be very happy all the details are not public knowledge. There are competitors who would love to have the exact details of the ‘inner-workings’. At least I am trying to give some Info. :acute:

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I will admit to being slightly uncomfortable betting on XRapid usage without a detailed understanding of how it works.  I do feel for  @tulo....   he is a bit frustrated after all this time still not able to get all the way into the technical innards (where he lives :) )

I myself won't understand all the details when they are finally available....    but I will follow the gist.

At the moment I guess I just trust David Schwartz and Stefan and Nik and the teams there...  they will have thought through all these use cases and their implications and outliers.

To the OP:   Business technical enquiries should go to Ripple....   contact them and ask.  Good luck to you and your venture.

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From the info JoelKatz has sprinkled throughout his Quora posts it seems:

That institutions that buy XRP on the XRP II exchange have contract limitations on being able to profit-take on their XRP. However, when they're using them for transactions, they are supposed to be using public exchanges to transact. They do in fact sell and buy them back on these exchanges. 

Now in terms of market-makers we really do not know. Myself and @Hodor tried thinking this out on Reddit about a  week ago. I'll be reaching out to Ripple devs shortly to see if they can provide some details. Below is a link to my discussion with @Hodor. I really suggest reading it to get an nice overview of everything and find out where we're stuck (ie the publically-available info hits a brick wall)

Also included is a very nice breakdown of the cost savings a bank will see. With CitiBank alone transaction $3 Trillion USD in cross-border transactions, they would save approximately $180Bn USD *A DAY*. I have my calculations in another link if you'd like, just ask. 

https://www.reddit.com/r/Ripple/comments/7qjt8b/xrp_by_the_numbers_2018_benchmarks/dsq9ha3/?context=3&st=jcs90rhg&sh=471629dc

(I think the link above takes you to just the comments between @Hodor and myself but if it doesn't I can copy them below--just let me know!)

Edited by Atomic1221

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2 hours ago, Mhizha_Man said:

Hi Ripple community

Im interested in creating a remittance based business and am trying to figure out how xRapid provides liquidity. The reason i ask is that the destination country has no exchange that lists XRP.. so no way of converting the XRP into fiat or into another cryptocurrency. 

So how would xRapid solve this issue? 

It seems that xRapid needs exchanges on both sides as of now.

You could try using an exchange in a neighboring country, or one in the same payment union. The irony is that the latter mostly exist for 1st world countries.

Try to find out what Flash FX are doing in Australia, and try reaching out to the Morgan Stanley guy who wrote the report mentioned below. 

It doesn't sound like the remittance business will be a cakewalk, but he does mention the prospects of upstart challengers. 

 

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8 minutes ago, Sukrim said:

Do the source/destination exchange have to support/be part of RippleNet? I guess yes, otherwise steps 1 and 5 would be terribly slow...

No, they don't. Yes, step 1 is typically slow, so larger amounts are pre-deposited in advance, out of band from the main operation. Step 5 can be much faster depending on the destination exchange and currency. The reason my example uses MXN is that SPEI is fast.

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1 hour ago, mDuo13 said:

No, they don't.

If I only hold EUR and XRP, how does xRapid help me complete a MXN payment then? I could do steps 1-3, but still would need a reliable partner to do 4+5.

I assumed that xRapid would rather mean that someone (in the EUR case) offers a XRPEUR pair to RippleNet participants and guarantees that x seconds after some EUR are reaching them, some XRP are delivered to any address that is specified and vice versa (if they receive some XRP on their deposit address, they send out EUR a few seconds later). There would of course be others (in Mexico, in the US...) that offer the same with their local currencies and the same interface, so it is possible to create payment paths and they can ensure to stay honest with mechanisms like Escrow for a 2 phase commit to minimize risk. These offered exchange rates would be secured by having funds at one or several exchanges in the background to do arbitrage or gain some profits from price differences between offers to RippleNet and the actual price on the exchange.

I didn't know that xRapid participants would need to offer a fiat:fiat pair instead. In that case I don't really see the big advantage of XRP to be honest in that scenario...

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1 hour ago, Sukrim said:

If I only hold EUR and XRP, how does xRapid help me complete a MXN payment then? I could do steps 1-3, but still would need a reliable partner to do 4+5.

I assumed that xRapid would rather mean that someone (in the EUR case) offers a XRPEUR pair to RippleNet participants and guarantees that x seconds after some EUR are reaching them, some XRP are delivered to any address that is specified and vice versa (if they receive some XRP on their deposit address, they send out EUR a few seconds later). There would of course be others (in Mexico, in the US...) that offer the same with their local currencies and the same interface, so it is possible to create payment paths and they can ensure to stay honest with mechanisms like Escrow for a 2 phase commit to minimize risk. These offered exchange rates would be secured by having funds at one or several exchanges in the background to do arbitrage or gain some profits from price differences between offers to RippleNet and the actual price on the exchange.

I didn't know that xRapid participants would need to offer a fiat:fiat pair instead. In that case I don't really see the big advantage of XRP to be honest in that scenario...

You're pooling liquidity from everyone else using said pool: that includes everyone using the exchange and everyone using xRapid for that corridor--and in whatever direction they're going, whether its buy or sell. 

This is why @JoelKatz has said the surge in price (and volume) from late December/early January has fast-forwarded their internal timetable for xRapid.

Edited by Atomic1221

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