How xPool may work, an attempted guess.

[KarmaCoverage]

https://medium.com/@KarmaCoverage/how-xpool-may-work-an-attempted-guess-daf3674f17c7

Here is what I have so far. Just to be clear, I have no insider information. I am simply a lone a financial engineer who happens to be familiar with Ripple's technology, mostly because  of my efforts to configure the technology towards an application in the Risk Markets, aka KarmaCoverage.

There will be another segment looking at the potential end state of the RippleNet topology, and the potential of SWIFT/BIS melding into RippleNet.

I do plan to make a read through YouTube video on this write up, so that I can add some more color around some portions of this write up, as it is fairly advanced.

To that end , please let me know what is not so easy to understand in the write up, and I will elaborate on those aspects in the video.

 

Edited April 21, 2018 by KarmaCoverage

[OzAlphaWolf]

Well, that was a quality read. Some of the technical stuff is beyond me but I captured the gist in those parts. Given we currently know nothing about xPool, this is about the best speculation we'll see on the topic until Ripple reveal some details.

[KarmaCoverage]

36 minutes ago, OzAlphaWolf said:

Well, that was a quality read. Some of the technical stuff is beyond me but I captured the gist in those parts. Given we currently know nothing about xPool, this is about the best speculation we'll see on the topic until Ripple reveal some details.

Yeah, given that I have already thought through most of this stuff for KarmaCoverage, I hoped I could take a somewhat quality swing at , what xPool could be, and how it may be stitched together. 

Just reread and definitely left out some key things, that I will have to touch on in the next segment on RippleNet topology. 

Edited April 21, 2018 by KarmaCoverage

[Hodor]

51 minutes ago, KarmaCoverage said:

https://medium.com/@KarmaCoverage/how-xpool-may-work-an-attempted-guess-daf3674f17c7

Here is what I have so far. Just to be clear, I have no insider information. I am simply a lone a financial engineer who happens to be familiar with Ripple's technology, mostly because of my of my efforts to configure the technology towards an application in the Risk Markets, aka KarmaCoverage.

There will be another segment looking at the potential end state of the RippleNet topology, and the potential of SWIFT/BIS melding into RippleNet.

I do plan to make a read through YouTube video on this write up, so that I can add some more color around some portions of this write up, as it is fairly advanced. To that end , please let me know what is not so easy to understand in the write up, and I will elaborate on those aspects in the video.

 

I just skimmed through both entries, and it is very nicely detailed! ??

Can't wait to get lost in this analysis; thanks @KarmaCoverage

[KarmaCoverage]

1 minute ago, Hodor said:

I just skimmed through both entries, and it is very nicely detailed! ??

Can't wait to get lost in this analysis; thanks @KarmaCoverage

Please let me know what is unclear. I will elaborate. 

[PriceIsRight]

Thank you for putting this together,  I have never understood the saying about drinking from a fire house, but I do now,  I’m not a high level guy and I was expecting a view from about a mile, this was a view from deep inside. I don’t know that I ever got exactly what your idea of xPOOL was.  I would think you were about to explain it then you would say I’ll come back to that later.  Seems like you have a lot of knowledge of the IT side...I personally don’t but wish I knew more.  I think if @Hodor had the time he could maybe restructure some of this and make it read as a very flowing paper.  Again, thank you for you input and hard work, maybe I just missed your explanation of xPOOL.

[nav]

Appreciate the write-up @KarmaCoverage! Your expertise lends itself well to this kind of detailed speculation.

 

Just noticed a small grammatical error in the second paragraph:

"This is a simple be a change in the value’s denominator".

[KarmaCoverage]

43 minutes ago, PriceIsRight said:

Seems like you have a lot of knowledge of the IT side

I'm really only a finance guy, or financial engineer, or market designer type. I see  how to connect opportunity flow.

Rippled is one hell of an accounting tool!... and that is a summation of my opinion on all basicly all of Crypto.

I only know the Rippled IT stuff, so I understand the tool kit I'm working with.

Honestly, it was obvious from the very begining that Ripple had high quality finance guys around. It is surely their guidence in what to develop that attracted me... well that and the tool!

...Now it's time to design applications, of which there are nearly endless possibilities.

[NightJanitor]

1 hour ago, KarmaCoverage said:

...Now it's time to design applications, of which there are nearly endless possibilities.

Mmmm hmmm... I've been breaking out all of my old P2P notes from like 2005, lately...  (I wish I had my brain - and body, for that matter - from back then, as well - I feel so old...)

On your notion of distributed pathfinding - really, really appreciate those thoughts - I started playing with a sort of "probabilistic non-determinism" idea after reading through ILQP.

[Donkey]

2 hours ago, KarmaCoverage said:

I'm really only a finance guy, or financial engineer, or market designer type. I see  how to connect opportunity flow.

Rippled is one hell of an accounting tool!... and that is a summation of my opinion on all basicly all of Crypto.

I only know the Rippled IT stuff, so I understand the tool kit I'm working with.

Honestly, it was obvious from the very begining that Ripple had high quality finance guys around. It is surely their guidence in what to develop that attracted me... well that and the tool!

...Now it's time to design applications, of which there are nearly endless possibilities.

Thanks for sharing your insights on Ripple's technology. What are your thoughts on the advent of quantum computing in relation to the distributed path-finding algorithm? How can RippleNet be scaled in future to take advantage of the nature of quantum computers and are you aware of any work that is already ongoing in that aspect?

[GiddyUp]

4 hours ago, KarmaCoverage said:

I'm really only a finance guy, or financial engineer, or market designer type. I see  how to connect opportunity flow.

Thanks @KarmaCoverage for this highly detailed deep dive into the possibilities of xPool...I can't claim to understand all that you've laid out for us, but it goes a long way towards explaining the glacial adoption of XRP by banks! 

I have a question about the quote below- being a finance guy, can you say if banks are even allowed under current laws to act as market makers with various currencies (especially crypto)?

 "The issue is the cost of floating the capital, and how the existing N/V cost structure can compete against the xRapid cost structure (note the XRPLedger is the “ Market for Float” part.. combined with.. what in this article is also noteworthy, that Market Maker behavior is emergent, thus making RippleNet a Complex System, I will come back to this) …which should end up emerging into a situation where the bank does not need to allocate near as much value to floating capital in multiple foreign markets. Unless the bank wants to and is actively Market Making for a profit (which can be done on their own private xCurrent ledger)."

Also, per your comment :

"The problem this leaves lingering is one of difficulty in managing multiple relationships, as well as not really enabling automation and information to flow about FX prices in all avaliable Exchanges."

I can see a real need for a central consensus price for fixing value to XRP (and other crypto) in the near future, such as https://www.fiscal.treasury.gov/fsreports/rpt/treasRptRateExch/itin-12-31-17.pdf.

Edited April 21, 2018 by GiddyUp
spelling

[King34Maine]

10 hours ago, KarmaCoverage said:

https://medium.com/@KarmaCoverage/how-xpool-may-work-an-attempted-guess-daf3674f17c7

Here is what I have so far. Just to be clear, I have no insider information. I am simply a lone a financial engineer who happens to be familiar with Ripple's technology, mostly because  of my efforts to configure the technology towards an application in the Risk Markets, aka KarmaCoverage.

There will be another segment looking at the potential end state of the RippleNet topology, and the potential of SWIFT/BIS melding into RippleNet.

I do plan to make a read through YouTube video on this write up, so that I can add some more color around some portions of this write up, as it is fairly advanced.

To that end , please let me know what is not so easy to understand in the write up, and I will elaborate on those aspects in the video.

 

I thoroughly enjoy reading your various posts....keep it up!!!.

[KarmaCoverage]

9 hours ago, NightJanitor said:

Mmmm hmmm... I've been breaking out all of my old P2P notes from like 2005, lately...  (I wish I had my brain - and body, for that matter - from back then, as well - I feel so old...)

On your notion of distributed pathfinding - really, really appreciate those thoughts - I started playing with a sort of "probabilistic non-determinism" idea after reading through ILQP.

I think I first saw Zopa around 2005, knew instantly it was using a weighted average.

The "distributed pathfinding" was one of the bigger realizations,  but it is nothing more than a weighted average in terms of math, preformed from the sender's perspective. This would be xPool's technical function.

I think "streaming payments" enables probabilistic pathfinding, because if you send a value chunk, and it does not get to the destination.. then you can resend it via another path (your not going to try the failed path again) So it is not predetermined (the exact sum) of all paths which a payment's various chunks may travel down.

Edited April 21, 2018 by KarmaCoverage

[KarmaCoverage]

@GiddyUp I'm not sure of the legality of a bank Market Making on their own xCurrent ledger, but if they are essentially doing the same thing they do today with their N/V relationships, just using a new tool (xCurrent) then I wouldn't expect there to be any problem.

---

Again I'm guessing here, but regarding the "all avaliable FX prices" I think about this from the perspective of the sender. So the xCurrent messaging layer (that precedes Settlement) should be able to collect the avaliable paths, and run a process to stack rank them and pick the cheapest combination.

With the new ILP and "forward pathfinding" if the messaging layer does not bring back the path cost options, then there would only be each xCurrent ledger's pathfinding finding the cheapest path through that xCurrent ledger hop.

This would yield the cheapest sum total path, because each xCurrent ledger would be finding the cheapest path through that ledger/hop/leg.

----

11 hours ago, GiddyUp said:

can see a real need for a central consensus price for fixing value to XRP

This is sort of a pipe dream, and I don't mean that in a bad way, just reality is XRP will be traded on many markets/Orderbooks, both on XRPLedger and off.

Think about this as similar to a stock of IBM... trading on the NYSE, the American exchange, the NADAQ, a European exchange, at their own internal option allocation values... etc (look for cross exchange arbitrage)

The real world is just messy, but this is what opens up arbitrage opportunities for good traders like @tulo and by repeatedly taking those trades, the spread between the multi markets/orderbooks should shrink to somewhat of an overall consensus. That is how markets work.

All of that aside, I personally look on XRPLedger orderbooks for price, that is truly the only markets where you can trade XRP.

Edited April 21, 2018 by KarmaCoverage

[Guest]

Wow, nice job! I really liked your thoughts on tying pathfinding to the streaming payments concept at the end. I hadn't made that connection yet.