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Something hit me this morning and I haven’t quite been able to figure it out. It might be best to use an example, so here goes:

To provide liquidity for a transaction, XRapid sources the best purchase price on all of its’ exchanges, so let’s say this transaction requires 10k XRP and it purchases these at $.50. Then, within the snap of a finger, it sells the XRP back, finding the best price on all of the exchanges being used.

Now, what if it finds a better sell price than the purchase price?  Across many exchanges I would imagine that this will happen, no?  If so, who would keep that?  Alternatively, what happens if there is a significant delta between the purchase and sell?  Who eats that?

I am at home, sick as a dog and drugged up....so maybe I am missing something here. Anyone?

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My understanding is xRapid agrees the buy and sell price before the transaction is executed, so there is transparency across the 3 second settlement process.

2 hours ago, AllinXRP said:

Now, what if it finds a better sell price than the purchase price?  Across many exchanges I would imagine that this will happen, no?  If so, who would keep that?  Alternatively, what happens if there is a significant delta between the purchase and sell?  Who eats that?

My understanding is that liquidity providers who lend XRP, or the owner of the XRP (e.g. banks, if they hold XRP for transactions) will be the ones who gain/lose on the slippage. 

If the sum of the transaction cost is positive, they just take it as profit. (In this case FX related cost of the transaction will be almost zero to the originator.)  Otherwise, slippage will be part of transaction cost to the originator. However, do not forget, that originator will have choices, so if the loss due to slippage seems to be greater than the cost of the next cheapest transaction type (e.g. via nostro/vostro) than the user will most probably chose the cheaper option, so the transaction does not use XRP, therefore there is no loss for the XRP holder. (The potential loss on slippage is somewhat limited by the system.)

The sum of these losses and gains, in addition to the appreciation or depreciation of XRP will be the cost of holding XRP, which is hoped to be positive at the end. 

Edited by Tako
Explanation on potential losses due to slippage and about who bears this cost was corrected.
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