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Tracking XRapid usage


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Like many others I have been following the Bitso Liquidity index which can be seen using this link: https://docs.google.com/spreadsheets/d/1pZ2POpljERK-oV3rusaCmq58U2badn5i9WOCIP9Wtmg/htmlview#gid=188

I track transactions on all corridors on a daily basis and there is certainly an increase to the philippine and mexico exchanges. I was somewhat surprised by the distribution of payments. For example

Yes, exactly! My gut feeling is this will take 18-24 months but let's do a little back of envelope calculation for the heck of it. Q3 XRP markets report indicated a 5x increase in ODL. If we assume H_

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I have not studied any type of xrapid transactions, but here is my perspective. Any market normally operates in cycles. Traders try to identify trends/patterns. I am guessing from this chart that the reason why there is this cycle pattern has to do with liquidity provided in the market at a period of time. Think of it this way, when a market enters an uptrend, the market does not go straight up under normal conditions. There are these oscillations/waves that occur while in an upward trend. The up oscillations are trend continuations while the down oscillations are pullbacks. Pullbacks allow the market to "catches it breath" before moving to a higher price point. If you do not have these pullbacks occurring, the market can exhaust itself in one direction and you have a violent pullback or a trend reversal. I believe this chart is showing just that, but it appears they are monitoring the liquidity of XRP on that exchange to try NOT to exhaust all liquidity. 

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28 minutes ago, ObeyTheWafflehouse said:

I have not studied any type of xrapid transactions, but here is my perspective. Any market normally operates in cycles. Traders try to identify trends/patterns. I am guessing from this chart that the reason why there is this cycle pattern has to do with liquidity provided in the market at a period of time. Think of it this way, when a market enters an uptrend, the market does not go straight up under normal conditions. There are these oscillations/waves that occur while in an upward trend. The up oscillations are trend continuations while the down oscillations are pullbacks. Pullbacks allow the market to "catches it breath" before moving to a higher price point. If you do not have these pullbacks occurring, the market can exhaust itself in one direction and you have a violent pullback or a trend reversal. I believe this chart is showing just that, but it appears they are monitoring the liquidity of XRP on that exchange to try NOT to exhaust all liquidity. 

Available liquidity gets exhausted and then reset and total available liquidity is being ramped up with each cycle?

Edited by Julian_Williams
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Is it possible that you had identified a cycle in a single, or small group of senders, who initially represented the bulk of the value being transferred.  So their pattern of usage affected the overall chart.

But perhaps the tap is opening and that signal is now being drowned by a more constant increasing volume in all the other senders?  (Not sure if I explained my point properly...)

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11 minutes ago, Tinyaccount said:

Is it possible that you had identified a cycle in a single, or small group of senders, who initially represented the bulk of the value being transferred.  So their pattern of usage affected the overall chart.

But perhaps the tap is opening and that signal is now being drowned by a more constant increasing volume in all the other senders?  (Not sure if I explained my point properly...)

Certainly that was my first thought.  The Wafflehouse idea is a surprise.  Whatever is happening is big in relation to what happened in the three preceding months :lol:

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1 hour ago, ObeyTheWafflehouse said:

I have not studied any type of xrapid transactions, but here is my perspective. Any market normally operates in cycles. Traders try to identify trends/patterns. I am guessing from this chart that the reason why there is this cycle pattern has to do with liquidity provided in the market at a period of time. Think of it this way, when a market enters an uptrend, the market does not go straight up under normal conditions. There are these oscillations/waves that occur while in an upward trend. The up oscillations are trend continuations while the down oscillations are pullbacks. Pullbacks allow the market to "catches it breath" before moving to a higher price point. If you do not have these pullbacks occurring, the market can exhaust itself in one direction and you have a violent pullback or a trend reversal. I believe this chart is showing just that, but it appears they are monitoring the liquidity of XRP on that exchange to try NOT to exhaust all liquidity. 

This sounds fairly plausible.  Maybe Ripple advised for incremental volume targets for MGI and others to reduce risk of increased volatility around available liquidity across exchanges?  If the trend on the charts continues, in addition to XRP's price slowly rising with the rest of the market, I'd also expect to see a significantly more stable XRP price if the rest of the market turns downward temporarily while in one of these higher XRP volume channels. 

Basically price will appreciate as the market appreciates, but downward pressure is nearly eliminated during these xRapid volume ramp ups.  So liquidity will steadily be built over time with the only downwards pressure on price/iquidity when the rest of the market swings down during the low xRapid volume days of the month.  Kind of like 3 steps forward, 2 steps back.  This would lead to baby steps with liquidity / price and volume increases.

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1 hour ago, Zedy44 said:

Basically price will appreciate as the market appreciates, but downward pressure is nearly eliminated during these xRapid volume ramp ups.  So liquidity will steadily be built over time with the only downwards pressure on price/iquidity when the rest of the market swings down during the low xRapid volume days of the month.  Kind of like 3 steps forward, 2 steps back.  This would lead to baby steps with liquidity / price and volume increases.

image.png.e121a7b39fbbcb4aa5c33dd20c364bf9.png

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5 hours ago, Tinyaccount said:

 

Is it possible that you had identified a cycle in a single, or small group of senders, who initially represented the bulk of the value being transferred.  So their pattern of usage affected the overall chart

 

This seems most likely to me. It is highly likely that regular remittances will follow monthly cycles in the way OP originally assumed. But the market is still quite small and so sudden noise can drown the signal. I would expect as the years progress that ODL remittance transactions will settle into monthly cycles according to when people are paid in different countries, also yearly cycles related to public holidays and tax events. Exciting times!

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6 hours ago, Tinyaccount said:

Is it possible that you had identified a cycle in a single, or small group of senders, who initially represented the bulk of the value being transferred.  So their pattern of usage affected the overall chart.

But perhaps the tap is opening and that signal is now being drowned by a more constant increasing volume in all the other senders?  (Not sure if I explained my point properly...)

Id also imagine any rollout of using ODL would be a gradual pilot roll out as well... worked in enough banks rolling out items to know this sort of thing is in the most cases piloted on certain areas/branches etc.

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6 hours ago, Julian_Williams said:

Available liquidity gets exhausted and then reset and total available liquidity is being ramped up with each cycle?

In theory. Someone has to be monitoring the liquidity (either the exchange/MMs/ or traders). Here's the idea, when a transaction is started from beginning to end. It is initiated at the exchange USD -> XRP, XRP -> XRP, XRP-> MXN. There will be an accumulation of XRP sitting at the second exchange (assuming a positive flow). How is that accumulated XRP redistributed back into the market? Arbitration is the best answer I have that makes logical sense, and there could be other methods too. However,  I bet this redistribution back into the market (arbitration?) may coincide with the down peaks or down cycles of the bitso liquidity index. 

This is a nascent market, so liquidity aka trade volume has to be taken in baby steps. Otherwise if you hypothetically shove, let's $1 billion dollars, through the Mexican corridor on the bitso exchange, you would get massive price swings at that exchange and more than likely the corridor would seize until more liquidity is provide.

Side note: I don't know the exact mechanics of the inner workings of an exchange when a transaction is initiated from beginning to end, but this is how I imagine the system would work. 

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6 hours ago, ObeyTheWafflehouse said:

In theory. Someone has to be monitoring the liquidity (either the exchange/MMs/ or traders). Here's the idea, when a transaction is started from beginning to end. It is initiated at the exchange USD -> XRP, XRP -> XRP, XRP-> MXN. There will be an accumulation of XRP sitting at the second exchange (assuming a positive flow). How is that accumulated XRP redistributed back into the market? Arbitration is the best answer I have that makes logical sense, and there could be other methods too. However,  I bet this redistribution back into the market (arbitration?) may coincide with the down peaks or down cycles of the bitso liquidity index. 

This is a nascent market, so liquidity aka trade volume has to be taken in baby steps. Otherwise if you hypothetically shove, let's $1 billion dollars, through the Mexican corridor on the bitso exchange, you would get massive price swings at that exchange and more than likely the corridor would seize until more liquidity is provide.

Side note: I don't know the exact mechanics of the inner workings of an exchange when a transaction is initiated from beginning to end, but this is how I imagine the system would work. 

I agree that an XRP transaction is a cycle - out of the exchange and replenishment back into the exchange.  This makes me think a transaction does not really take 3 seconds, it takes until the exchange is replenished.  The replenishment may happen with a transaction going the other way (cancelling each other out), but it also may be through periodic arbitrage movements.

I suppose the exchange can start to predict the cycles over time, and gainsay the cycle by putting in more accurate orders to pre-stock for periods in the month when they will expect bulges in usage.

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29 minutes ago, Julian_Williams said:

I agree that an XRP transaction is a cycle - out of the exchange and replenishment back into the exchange.  This makes me think a transaction does not really take 3 seconds, it takes until the exchange is replenished.  The replenishment may happen with a transaction going the other way (cancelling each other out), but it also may be through periodic arbitrage movements.

I suppose the exchange can start to predict the cycles over time, and gainsay the cycle by putting in more accurate orders to pre-stock for periods in the month when they will expect bulges in usage.

I agree. That would mean that the payments are done in batches right now, so no instant settlement yet. Like Moneygram has to wait until the batch is filled up to 40k xrp before they can settle the payments. Or even cut bigger payments in multiple parts?

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The chart in OP isn't the volume but the "Liquidity Index". The sharp drop offs that yo are seeing is an effect of that the volatility of that day is increasing significantly compared to the previous days. (See https://docs.google.com/spreadsheets/d/1pZ2POpljERK-oV3rusaCmq58U2badn5i9WOCIP9Wtmg/htmlview# and compare the value in column I for the dates 9/16/2019 and 9/17/2019 for example). Personal i think it makes more sense to only track volume which is steadily increasing without any drops:

image.png.4d1957f395ada5a05ccd5ff5c14b440a.png

 

See this post for more information: 

 

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