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xcurrent liquidity vs xrapid liquidity

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I heard mentioned here that xcurrent liquidity will help xrapid liquidity. I dont see how that could work. Can someone explain?

For example, the liquidity needed for xcurrent is in the following currency pair markets: 
"[BANK_A_USD_IOU]<->[BANK_B_USD_IOU]",
"[BANK_A_EUR_IOU]<->[BANK_B_EUR_IOU]"

Similarly, the liquidity needed for xrapid is in the following currency pair markets: 
"[BANK_A_USD_IOU]<->[XRP]",
"[BANK_B_USD_IOU]<->[XRP]",
"[BANK_A_EUR_IOU]<->[XRP]",
"[BANK_B_EUR_IOU]<->[XRP]"

So the liquidity that xcurrent and xraid uses are in completely different (currency pair) markets. One leg of the currency pair markets are the same in both xrapid and xcurrent (say BANK_A_USD_IOU), but I dont see how that makes a difference

Edited by petke9

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11 minutes ago, petke9 said:

I heard mentioned here that xcurrent liquidity will help xrapid liquidity. I dont see how that could work. Can someone explain?

For example, the liquidity needed for xcurrent is in the following currency pair markets: 
"[BANK_A_USD_IOU]<->[BANK_B_USD_IOU]",
"[BANK_A_EUR_IOU]<->[BANK_B_EUR_IOU]"

Similarly, the liquidity needed for xrapid is in the following currency pair markets: 
"[BANK_A_USD_IOU]<->[XRP]",
"[BANK_B_USD_IOU]<->[XRP]",
"[BANK_A_EUR_IOU]<->[XRP]",
"[BANK_B_EUR_IOU]<->[XRP]"

So the liquidity that xcurrent and xraid uses are in completely different (currency pair) markets. One leg of the currency pair markets are the same in both xrapid and xcurrent (say BANK_A_USD_IOU), but I dont see how that makes a difference

I'm not sure the word "liquidity" and xCurrent make sense together. 

xCurrent doesn't trade IOUs, does it? (someone correct me if I'm wrong)

From what I understand, xCurrent allows customers who are on Ripplenet to adjust each other's ledger's in real time based on their current account deposits. For instance, if I'm sending money to someone in Japan and my bank is connected to my friend's bank in Japan via Ripple, xCurrent would, in real time, adjust the debt on each other's ledgers to increase the debt to my friend, and decrease the debt to my bank. 

This still requires banks to settle up with one another at particular intervals whenever their funds run low. I would imagine xCurrent also has the feature to build in FX fees which might look something like the Japanese bank owing more to their FX service and the FX service owing local currency to the bank, and therefore the end user I was originally sending my money to. 

I could be WAY wrong here as I don't think Ripple has been particularly forthcoming with the ins and outs of xCurrent. So, please, pick me apart if someone out there knows I'm way off base. I just don't think that IOUs are being traded via xCurrent because we would see IOU tokens floating around somewhere. 

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My understanding of this is that xCurrent doesn't offer nor add to a company's liquidity as it's effectively a messaging service. If anything, it's more like xCurrent users immediately add on to xRapid liquidity the moment they flick the switch towards xRapid production (JK made clear the process is relatively simple). When the prophecy fulfills, a majority of these xCurrent users will make the shift one after another adding liquidity?

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1 hour ago, Hodlezerper said:

xCurrent doesn't trade IOUs, does it? (someone correct me if I'm wrong)

From what I understand, xCurrent allows customers who are on Ripplenet to adjust each other's ledger's in real time based on their current account deposits. For instance, if I'm sending money to someone in Japan and my bank is connected to my friend's bank in Japan via Ripple, xCurrent would, in real time, adjust the debt on each other's ledgers to increase the debt to my friend, and decrease the debt to my bank. 

Thanks for your reply. Im trying  to figure this out, but im not sure I got it right. But thats how i think it works also. Debt is IOUs. Said another way:

The way I think xcurrent works. A bank has a internal ledger (database) that keeps track of how much money it owes to each of its customers. Conceptually a bank can send payments to the other, by each bank having an account at the other bank. When a payment is sent, both the banks simply adjust their internal ledgers with regard to how much USD it owes the other bank. So bank BANK_B  ends up with a lot of BANK_A_USD_IOU on their books/ledger, and vice versa.

xcurrent helps the banks synchronize the updating of their internal ledgers at the same time.

I guess at some point the banks can settle their debts with each other, so that BANK_A_USD_IOU can be exchanged for something more trustworthy like BIG_CLEARING_BANK_USD_IOU, or even CENTRALBANK_USD_IOU (which is about as close to real fiat money as it gets). I dont think xcurrent helps with this (as xcurrent is about payment but not settlement?)

Anyone, please correct me here in anything I got wrong.

Edited by petke9

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Liquidity in xCurrent is from a different source than liquidity in xRapid. I did this post to try and help people understand the whole of RippleNet.

The key difference is the source of the liquidity.

xCurrent: Before Ripple, banks had inter-bank relationships. Now with xCurrent those pre-existing relationships can join the digital age, increasing speed and lowering costs to both xCurrent using banks. No need to change the terms of the inter-bank relationship, just digitize it.

Think of the 47 banks in Japan using xCurrent (I assume) to create a Domestic Payment network among themselves. Each bank will have a bilateral agreement with the 46 others, (unless they did one agreement for everyone) maybe these are bidirectional credit lines, or maybe each bank makes a nostro/vostro deposit with the others. Either way, they can enable payments to flow in between the banks in real time, and settle up their bilateral agreements, however they arranged that... at the end of each day, or week. So all this domestic payment flow is "xCurrent liquidity" and it never needs to touch the XRPLedger.

(My wife's grandfather used to do this for the local bank in Texas around the turn of the century. He would pack up some cash & all the other bank's checks he had cashed that week.  Then ride his horse and meet other banker's men at a specific place on Sundays, and they would all bring the checks they had cashed for eachother's customers, and settle up. Then meet again next week.)

Also, there is no reason the other banks using xCurrent in US & Euro couldn't do the same thing with their preexisting inter-bank relationships as long as both banks use xCurrent.

xRapid: This liquidity matches trading liquidity on Exchanges with payment liquidity requests from xVia & corp treasurers who are clients of xCurrent using banks. Since the liquidity flows here flows through XRPLedger these are likely to be the international payment flows.

Here is how a payment flows through RippleNet's parts with xRapid... 

  • xVia is corp treasury
  • xCurrent is a bank
  • xRapid is exchanges
  • ILP connects everything, even other crypto ledgers like btc/eth

Payment flows go through... Sending Corp xVia > xCurrent Bank > ILP > xRapid : (Exchange fiat for XRP) > ILP > XRPL tx > ILP > xRapid : (Exchange XRP for fiat) > ILP > xCurrent Bank > Receiving Corp xVia

-----

In short:

  • xCurrent liquidity is sourced from prexisting inter-bank relationships, and most likely domestic payment flows
  • xRapid liquidity is sources from Exchange XRP trading activity, and most likely are international payment flows

Look at this chart from that other post, and imagine... xCurrent payments paths flowing around the outer ring... while.... xRapid liquidity flows all the way through the XRPLedger in the middle.

Capture.PNG.39e5d57e0808f2c5fc869b8351a8a337.PNG

 

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