Locking up Ripple's XRP with Crypto Conditions

[Xi195]

JoelKatz mentioned locking up some of Ripple's XRP with crypto conditions would be technically possible and now Miguel has mentioned the idea in an interview. 

While locking up XRP would limit Ripple's ability to react to market conditions, such a move would inject much needed certainty in the market. 

@Apollo Has presented what I believe is a terrific middle ground. 

This is my summary/adaptation of the idea:

1. Lock up XRP that Ripple knows it won't need any time soon ~30B
2. Set aside some amount to be automatically distributed to Ripple on a regular basis. I.e lock up ~20B which distributes 2B per year for OTC sales.
3. Keep the remaining ~13B XRP in a disclosed set of addresses where they are lent out as a hedging mechanism or utilized to incentivize liquidity

A well thought out strategy could allow Ripple sufficient flexibility while creating much needed assurance in the market. 
Excited to hear other ideas.

*tagging in @miguel*

Edited March 23, 2017 by Xi195

[Mercury]

Hell of a faucet.

 

The idea can be branched out to gateway incentives/ investments particular in areas without a IOU asset represented yet. Ripple could be more free with XRP backed investment that is locked up with faucet. If the gateway goes under or doesn't meet certain guidelines such as KYC the amount can be returned to be reinvested

 

[nikb]

You don't even need cryptoconditions for that - Escrow can timelock funds, so you can create a transaction that sequesters XRP until some time in the future.

I think doing this would be a great idea for the company.

We now return you to your regularly scheduled @miguel programming. 

[Mercury]

Oh@nikb you always know just what to say, just as I was starting to think@miguel supplemented you as sexiest Ripple employee around you go and say such sweet things

[miguel]

No one will ever replace @nikb

He is literally THE MAN.  We are incredibly lucky to have him running the show.

[nikb]

[Xi195]

18 minutes ago, nikb said:

Escrow can timelock funds, so you can create a transaction that sequesters XRP until some time in the future.

Thanks @nikb.  Escrow sounds like the right tool for the job. 

[pucksterpete]

26 minutes ago, miguel said:

No one will ever replace @nikb

He is literally THE MAN.  We are incredibly lucky to have him running the show.

Nice Video

[Omnis]

34 minutes ago, miguel said:

No one will ever replace @nikb

He is literally THE MAN.  We are incredibly lucky to have him running the show.

 

Sooo... will we hear of an escrow agreement soon where funds are predictably released? Providing market certainty  

[Apollo]

I would lean toward locking up more rather than less. The less XRP Ripple has at hand at any given time the more their total stash would be worth. I don't think a lockup would provide much certainty unless it actually limited Ripple's available supply to something the market might reasonably handle. I think that is probably in the area of 1.5-4 bill per year, with a 1-3 bill reserve held outside the lockup.

 The point I was trying to make was that a structure like this would--counterintuitively-- lead to increased real-world flexibility due to a lower supply and vast improvements in market certainty. Practically, Ripple or anyone else for that matter will be limited to selling only a few bill per year without dramatically impacting the price. So even if Ripple wanted to sell like 20 Bill in one year to a single buyer, that buyer could not turn around and sell (on market) without functionally destroying their own investment. So even if the XRP are under lockup, Ripple could sell them a contract to deliver the 20 Bill over the next 10 years, without affecting the utility of the XRP they deliver. In fact, I would argue that people would be willing to pay more for this contract (if Ripple had a limit of 3 BIlll a year or so) then Ripple could receive by selling 20 Bill outright without a lockup in place. Even if Ripple sharply limited its payout to .5 Bill or so, I think they would still be in a better position because the scarcity would massively impact the price.

Another benefit of this plan is it signals to the market that Ripple will remain tied to the fate of XRP. If Ripple cannot get out of the XRP game until the last of their XRP are delivered in 30 years, this could help provide institutions with greater certainty that if they build something on RCL, or use XRP directly Ripple has a long-term interest in providing support to their project. 

Edited March 23, 2017 by Apollo

[ElMoskito]

I would love to see escrow agreements for:

• Founders funds (Jed AND Larsen AND Britto)
• Ripple funds

It would give a good signal for the investors and speculators.

[Apollo]

9 minutes ago, ElMoskito said:

I would love to see escrow agreements for:

• Founders funds (Jed AND Larsen AND Britto)
• Ripple funds

It would give a good signal for the investors and speculators.

 

Jed's XRP are already effectively under lockup With Ripple... 

Larsen gave away most of his, and Britto I think only has 3 or 4 Bill, and neither are going to cut off their nose to spite their face the way Jed did. Although, I am sure it would help XRP's image regardless.

[Xi195]

2 hours ago, Apollo said:

Jed's XRP are already effectively under lockup With Ripple... 

Wouldn't hurt to centralize all this info including disclosing all addresses. I think that's an important component. While we know what the terms of Jed's agreement is we don't know when or how it's executed. 

Same thing applies with Ripple's XRP. All addresses should be disclosed whether or not there's an escrow lock up. 

It's important to remember that these are not strategies Ripple should consider for our sake but for the company's best interest. Any decision that minimizes the uncertainty around XRP and therefore increases long term value, stands to benefit Ripple more than any other. 

[Apollo]

1 minute ago, Xi195 said:

It's important to remember that these are not strategies Ripple should consider for our sake but for the company's best interest. Any decision that minimizes the uncertainty around XRP and therefore increases long term value, stands to benefit Ripple more than any other. 

1

+10,000!!!

[Xi195]

Another way to look at this is to ask "If Ripple could go back to the Genesis ledger would XRP be 100% premined?"  I think the resounding answer is no (based on Miguel's comments on the subject in the Epicenter interview I think he agrees). 

An escrow lock-up effectively allows Ripple to go back and implement a sensible distribution  strategy. It's a lot easier to dispel the "scam" accusation when dustribution is set and used for funding. Like many other coins today this strategy is rational and acceptable. 

Also, isn't that the basis of the scam argument? The fact that the coins are 100% pre-mined? 

A related but equally imprtant topic is decentralization. RCL needs to be demonstratively decentralized for any of this to matter. I'm hoping we hear an update on this soon. Good to see Gatehub putting validators online. We need many more to follow.