Locking up Ripple's XRP with Crypto Conditions

[Apollo]

One of the funny things about this plan, is that if Ripple limited its self to the theoretically ideal amount, the added demand for XRP might make them feel like they were overly restrictive. Although I am sure having too many buyers would be a nice problem to have. 

 

[Apollo]

7 minutes ago, Xi195 said:

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. 

3

I am pretty sure they have a plan in place for this. One of the more influential guys there is a fan of the show rather than tell philosophical approach when it comes to this issue. 

Also, I think they may want to complete their major code changes before moving on this. 

[Droopy]

[Mercury]

Or even if some of Ripple's funds were split into a couple distribution wallets. The one as mentioned above would be directly to Ripple for its operations. The other could be to something like the steering committee that could release funds for network growth. This way Ripple still gets the same end result- funding and promotion of the network without having to do it all by themselves. This would also remove any conflict or appearance of conflict and get other parties invested in direct promotion.

[Guest]

basically we're talking about a temporary inflation rate to add predictability and thus instil confidence

only diff being there's a hard upper limit on total supply, whereas with fiat it's variable

[Mercury]

1 hour ago, zerpdigger said:

basically we're talking about a temporary inflation rate to add predictability and thus instil confidence

only diff being there's a hard upper limit on total supply, whereas with fiat it's variable

Interesting, didn't think of it that way.

I guess in my head I was perhaps visualizing a locked up Ripple zerp fund functioning similarly to sovereign wealth fund. Provides some revenue (certainty) and provides protection against the boom and bust of a crypto coin (stabilization). If they even add the clause that the principal of each returned loan and x amount of % be returned to the fund Ripple could have a long term or even permanent funding mechanism.

In such a scenario I would be willing to have a smaller amount locked up in a such manner  permanently with the rest perhaps time locked to provide certainty of distribution

[Guest]

yeah, i guess it could be like that too, many options - they'll end up need an economics guru i expect, mind you they have susan athey 

i rly hope they can keep price down while trade volume goes through the roof, so they can burn off jed's stash more quickly

the settlement was a joke, can't believe he holds so much, what an asshat 

[Guest]

In the 'countering the Damocles effect' thread I proposed the idea of linking the supply of XRP  to price development. If the price rises to fast, the supply increases and vice versa. Of course in an automated Escrow construction. Linking to the price also factors in the demand development. A pure time driven Escrow does not. Thinking about it I like the analogy of the steam regulator on a steam machine which increases/decreased steam dependent on RPM. It somewhat even resembles the Ripple logo with the balls.

[Xi195]

1 minute ago, Annevanzwol said:

If the price rises to fast, the supply increases and vice versa

I think this would be counter-productive for long-term appreciation. It allows too much uncertainty. 

A constant fixed amount would create more predictability/certainty in the market.

[Guest]

52 minutes ago, Xi195 said:

I think this would be counter-productive for long-term appreciation. It allows too much uncertainty. 

A constant fixed amount would create more predictability/certainty in the market.

I am not sure I am following you. A fixed amount over time gives predictably on the supply side. Not on demand side development. Both elements are essential for price development. Ripple cannot disclose partnership etc. still underway. A price driven supply velocity covers both aspects. You can set a desirable price growth percentage and let the escrow based distribution system automatically control the XRP supply to keep it at the desired level. 

[Xi195]

1 minute ago, Annevanzwol said:

A price driven supply velocity covers both aspects. You can set a desirable price growth percentage and let the escrow based distribution system automatically control the XRP supply to keep it at the desired level. 

Your understanding of markets is likely much better than mine, but a distribution strategy targeting a specific growth trajectory sounds like a market with excessive controls, not like a freely traded asset. I would have no interest in trading an asset with such unknown controls. If the controls were known every attempt to break or exploit them would be made. 

I get your idea, but simply put I think it creates more questions than answers and with Ripple holding 62+% of supply I think there's already enough questions.

If Milton Friedman is good with a steady 5% money supply increase, it works for me. https://en.wikipedia.org/wiki/Friedman's_k-percent_rule

 

[Guest]

Would really like to understand why a price driven escrow distribution would not work. Generally speaking as long as supply lags behind demand I would think there is an upward pressure on price. If price rises to fast you increase supply untill growth is within the desired bandwidth again. This could be automated. But maybe I am missing something here. 

In any case as I stated in the other thread. The uncertainty about distribution is more killing than the specifics of a distribution system. 

[Guest]

Just like the regulator on the steam machine keep it simple and elegant. If the RPM is above the desired level the centrifugal force will force the weights further outwards which chokes the steam inlet. If the RPM is below the desired level steam inlet is automatically increased. The system keeps itself in balance. 

So for example if a third party tries to flood the market with XRP to negatively impact the price automatically the XRP supply by Ripple is lowered to counteract the effect. 

Still think the principle could work. Of course I understand you need to do some serious financial modeling to choose the correct parameters.  

[will4star]

42 minutes ago, Annevanzwol said:

Would really like to understand why a price driven escrow distribution would not work. Generally speaking as long as supply lags behind demand I would think there is an upward pressure on price. If price rises to fast you increase supply untill growth is within the desired bandwidth again. This could be automated. But maybe I am missing something here. 

In any case as I stated in the other thread. The uncertainty about distribution is more killing than the specifics of a distribution system. 

The only issue i can see that I think @Xi195 might be alluding to would be if ripple also had a corresponding and countering buy-back program in place, whereby if the price dropped then RL could/ buy back proportion X of xrp given price drop Y . That would definitely smack of market. - in theory they could hold the price at whatever they wanted. Only having the distribution plan as you said, however, i think is a very sensibe idea. It would also only last as long as rl have spare xrp to sell so could be seen as finite, rather than ongoing manipulation. 

 

Its effectively safeguarding all XRP holders investment by ensuring RL cant flood the market when the price rises. Plus adding much needed transparency.

Edited March 24, 2017 by will4star

[Apollo]

5 minutes ago, Annevanzwol said:

Just like the regulator on the steam machine keep it simple and elegant. If the RPM is above the desired level the centrifugal force will force the weights further outwards which chokes the steam inlet. If the RPM is below the desired level steam inlet is automatically increased. The system keeps itself in balance. 

So for example if a third party tries to flood the market with XRP to negatively impact the price automatically the XRP supply by Ripple is lowered to counteract the effect. 

Still think the principle could work. Of course I understand you need to do some serious financial modeling to choose the correct parameters.  

 

There is nothing stopping Ripple from using some of their XRP this way, even if they used a fixed system. If the system paid them a fixed monthly amount, and they held another 2 B on their books, they have a range of actions they could use to effect the market. Ripple could; decide not to distribute the monthly amount, and add it to their reserves (keeping the threat that they might sell), or not distribute and send an amount back into lockup, or dump some of their reserves to have the opposite effect. I would prefer if Ripple did something like this because their range of possible actions would be clear, simple, and easy for the market to take into account. It also makes for a simple sales pitch. I would love to be able to say that Ripple gets X amount per month (which they use to build the network) and holds Y amount on their books to ensure they have sufficient flexibility to respond to the needs of the market. If they could get some of their Big holders to do something similar it would make it way easier to sell people on XRP.