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Jot7684

Question on the Cross-Border ODL network

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38 minutes ago, xerxesramesepolybius said:

So why wasn't ODL prototyped for say Yen/Korean Won? That would have made more sense

Ok...  the first thing to note is that you and I have given it three minutes of thought and we don’t do it for a living.    The guys at Ripple do this full time professionally...  so it’s not likely that your or my ideas are better,  or that they haven’t thought through these issues.

 

40 minutes ago, xerxesramesepolybius said:

This does not help the imbalance problem at all.

Yeah it does.

 

41 minutes ago, xerxesramesepolybius said:

Spreading the network does not help? How can it? Market Maker in Mexico ends up with pile of XRP that needs to get converted back to Pesos, market maker in Thailand will presumably end up with pile fo XRP that needs to convert back to Baht.

Nah.   What happens once the options open up and the SME start using it,  is that it was not a market maker that paid Pesos for the incoming XRP.  It’s the Car manufacturer...  and she is going to use them to pay the Thai parts supplier.  The market makers will buy them too...  but they will do that because they can use Ripplenet to transfer fiat and/or they have multiple corridors and opportunities around the world.

The thing is that you are looking at the incomplete beginning stages and thinking it doesn’t work.  But even if that’s true, and I don’t believe it is, the end state is a lot different.

 

46 minutes ago, xerxesramesepolybius said:

Flows each direction equal out

It is not a binary option,  it’s many times greater than that because of the multiple paths through a well connected network.  The flows can slosh around and don’t require the exact matching of each direction in a single corridor.

The other thing we could believe is that Ripple are fools and didn’t think of any of this.  Or maybe it is a scam?

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15 minutes ago, Dogowner5 said:

Ok...  the first thing to note is that you and I have given it three minutes of thought and we don’t do it for a living.    The guys at Ripple do this full time professionally...  so it’s not likely that your or my ideas are better,  or that they haven’t thought through these issues.

Ripple are all knowing, so we can't question anything. Ok, if that is how you think, no poin discussing that point with you.

 

18 minutes ago, Dogowner5 said:

Nah.   What happens once the options open up and the SME start using it,  is that it was not a market maker that paid Pesos for the incoming XRP.  It’s the Car manufacturer...  and she is going to use them to pay the Thai parts supplier.  The market makers will buy them too...  but they will do that because they can use Ripplenet to transfer fiat and/or they have multiple corridors and opportunities around the world.

The thing is that you are looking at the incomplete beginning stages and thinking it doesn’t work.  But even if that’s true, and I don’t believe it is, the end state is a lot different.

Sorry, I think that is wishful thinking that does not answer the question. So do you agree that what we have now doesn't work?

19 minutes ago, Dogowner5 said:

It is not a binary option,  it’s many times greater than that because of the multiple paths through a well connected network.  The flows can slosh around and don’t require the exact matching of each direction in a single corridor.

It is binary because each market maker dealing with an unbalanced market faces a problem in that specific market of converting excess XRP back into the currency they need buy more incoming XRP in order to make the payments. Mexican market makers need pesos, not baht or anything else.

Can't you see that, there is a very small set of basic flows. Ripple can always pump in more XRP but even that will run out eventually. The problem is the local currency liquidity. Even Moneygram acknowledge that.

22 minutes ago, Dogowner5 said:

The other thing we could believe is that Ripple are fools and didn’t think of any of this.  Or maybe it is a scam?

I am going to ignore that, since it is not relevant to any of the points in this thread.

 

 

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1 hour ago, Trisky said:

@xerxesramesepolybius check out this recent video on the Moneygram ''market development fees'.

The problem and solution are discussed here. To The Lifeboats is an excellent source for anything XRP and crypto related imho:

The discussion is also great because of the negative comments made in relation to Ripple PR and the current financial state MoneyGram's in at the moment.

And check the diagram with transfer volume and the competition on the 15th minute (and who's in bed with Ripple on that list ^_^).

There is another interesting point he made. A new rail. A unique product, Account to account processing MoneyGram is working on in relation to ODL. Reason enough for a separate topic:

 

Additional, they extended the contract (to 2023) ;).

Never  watched one  of his videos before, (too long). He is very tough on Ripple, really quite refreshing but does not answerr any of the questions in this thread.

If you think any of his specific comments do, please put it out.

Oh Moneygram is not Netflix versus Blockbuster. We all know by now the history of Moneygram. THey are a desperate failing firm who took money because they needed it.

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37 minutes ago, xerxesramesepolybius said:

Ripple are all knowing, so we can't question anything.

A fairly common rhetorical technique is to take a point and stretch it to the absurd,  and by doing so make the original point absurd by association.   I did not say that,  and I’m guessing you know it.

My point was that either it is a scam,  or these people,  who do it for a living and have everything to gain if they can succeed, have a better understanding of the problems than you and I,  and yet they still see a way forward.  Knowing that should give any armchair Admiral at least a little pause before concluding that this or that corridor cannot work.

And no,  they won’t run out of money eventually ( if you define eventually as being within our working lifetime,) and that’s a good thing because they are making a sea change in world finance which is no small undertaking.  Perhaps they are one of the only players with the wherewithal to achieve this revolution of finance. 

I’m a little puzzled why you think it cannot have multiple paths and players beyond just market makers,  and therefore a balance overall,  not just across one corridor.

But anyway,  I’ve made my point and I guess it’s up to you and the reader to decide if this current situation is the limit of possibilities.  Thank you for the discussion.
 

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Posted (edited)
17 hours ago, xerxesramesepolybius said:

If the USD-Peso conversion for the Market Makers is so cheap at the end of the cycle why not just get rid of all the previous steps and send Dollars to Pesos via conventional routes?

To clarify this:  what you're asking is that since Moneygram has to do the exact same thing, send USD to MXN Peso, why bother at all ?

If that a fair representation of what you're asking ?

I just noticed I should add @Jot7684 here, since he started this thread...

Edited by Frans

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Posted (edited)

 

1 hour ago, xerxesramesepolybius said:

Never  watched one  of his videos before, (too long).

They start exactly at the right time, did that especially for you because I knew you can be a bit lazy ^_^. No thanks required. You can speed youtube video's up by the way or hire someone to do your work for you.
 

1 hour ago, xerxesramesepolybius said:

Oh Moneygram is not Netflix versus Blockbuster. We all know by now the history of Moneygram. THey are a desperate failing firm who took money because they needed it.

Exactly the reason why the information in the video is so important for you to further understand how insider are talking about it so you have a better view and also know what you are talking about. Probably the best and most detailed info you will get in relation to the MoneyGram partnership (and need, while hoping for better and specific questions). Your views on things are not important and your questions off. 

 Let me try to answer some: 

3 hours ago, xerxesramesepolybius said:

It just does not seem to make sense unless you have

1. A lot of natural liquidity for XRP in each market. Mexico XRP? Really?

2. Flows each direction equal out

So why wasn't ODL prototyped for say Yen/Korean Won? That would have made more sense

USA/Mexico - :nea: ,Thailand/Japan - :nea:

  1. Yeah.. really??!! Check the guys recent video where Bitso was guest on a live podcast with all kind of BTC maxi's. Fun to watch the ignorance about the MXN/XRP corridor and XRP in general. 
     
  2. No question detected by the AI, moving on... sorry for the inconvenience
     
  3. Question can't be answered because ODL seemed to be a prototype for the IoV, a global thing, something you don't understand because it seems to be too much information for you or taking to long. Everything is taking soo long for you.

Your emoticons are touching but are not considered a question mark and your statement what would make sense seems to be false for now. I keep my own opinion, thank you. Yours is not concerning me at all but like objectivity in these kind of topics.

So...., come again? You get good info here, free of charge (but mostly for anyone else reading this to be honest ). I hope you will get it at some point but am afraid for that future (and also do a prayer for those on other forums if you have interest in other crypto projects).

More detailed info about the workings of the XRP valuation models by JK, it will complement the video:

 

Edited by Trisky

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Posted (edited)
3 hours ago, Frans said:

To clarify this:  what you're asking is that since Moneygram has to do the exact same thing, send USD to MXN Peso, why bother at all ?

If that a fair representation of what you're asking ?

I just noticed I should add @Jot7684 here, since he started this thread...

Can I take that as a yes ? Sure I can  :D

The rebalancing of a lopsided corridor is indeed an interesting problem.

It comes down to a MM being able to provide liquidity, cover risks and rebalance at a profit, while still leaving a profit margin for Moneygram as well.

So the question becomes which revenue streams can a MM use to offset the cost.

I can name a few off the top of my head:

1. a MM gets paid by an exchange to make markets/place orders that are bought. MM fees

2. @Jot7684 mentioned discounts for batching large amounts

3. instead of 2., or on top of 2. MM might get discounts for recurring business. Moneygram guarantees certain flows. The Company (Moneygram) is compensated by Ripple in XRP for developing and bringing liquidity to foreign exchange markets, facilitated by the ODL platform, and providing a reliable level of foreign exchange trading activity.

(providing a reliable level of ... trading activity)

4. they might in part use the available liquidity on Bitso in eg BTC, ETH, thereby reducing the need and cost for going USD -> Peso

5. said MM might also be active on BitStamp, where it can send the XRP to to set another order for which they get paid by Bitstamp...

6. maybe Ripple has financial incentives for MM to come into this space as well

I am probably missing more revenue streams, maybe streams that are off ledger, I don't know.

 

Another hint as to how Ripple is trying to make rebalancing easier is in the pic I posted in another thread showing (imo) test transactions:

Especially notice MXN - JPY. Now, arguably MM in Japan ends up with tons of XRP without any flows outward, but Japan has more than 1 very liquid exchanges.

Hope this helps,

Frans

PS  SBI VC trade has been in maintenence at least once a day for weeks and weeks now ...  they are swatting bugs like crazy it seems

https://sbivc.jp/pro/exchange

 

0013_Corridors.jpg

Edited by Frans

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Posted (edited)
4 hours ago, Frans said:

I am probably missing more revenue streams

And indeed, I was. Or maybe, judge for yourself.

So, in the 2016 Q4 market report, Ripple announces the following:

Also, in Q1 2017 we plan to offer qualified market participants the ability to borrow XRP. This will facilitate enhanced participation in XRP markets and will lead to deeper and more stable markets.

In other words, these are probably (in part) incentives to get MM's on board.

An MM that wants to start in the corridor USD - MXN (Bitso-BitStamp) needs 2 things:

1. a pile of XRP to facilitate the flow of Moneygram htrough Bitstamp, which they know is coming, since Moneygram is contractually obligated to do so.

2. a pile of MXN Peso.

Now, to make 1. simple and attractive, Ripple (probably Miguel Vias) talked to MM and said: You can off course buy a ton of XRP on the open market, but since we are an interested party to get this stuff up and running, we can lend you a pile of XRP. You pay us a percentage like it is a loan, so you can keep those intital dollars in your pocket. You also don't have to go onto the open market to borrow it, and the percentage we charge is below market.

@xerxesramesepolybius

Quote

A Mexican ODL market maker needs pesos to buy incoming XRP. So they need to convert their XRP = liquidity challenge. And they need to do it fairly quickly because sudden swings in XRP values can leave them bankrupt = market risk challenge

Leaves them bankrupt ? That sounds dire and one of the links you showed mentioned this as well. It is 100% false.

A Market maker has several tools in his arsenal to manage risk. The first that come to mind are derivatives. More specifically (put)options and futures. If they'd build up a big pile of XRP during the day, they simply use a put option/go short on XRP.

This is in Ripple Q4 2019 report:

To date, XRP derivatives have become available on several exchanges such as Binance, Huobi, OkeX, AAX and FTX. Moreover, XRP derivatives are a potentially important tool in order to manage exposures and transactions through Ripple’s cross-border payment solutions, where XRP is leveraged.

The introduction of derivatives, widely accessible in more mature markets for traditional assets, is an important step in the maturation of digital assets, as they help to improve the efficiency, liquidity and robustness of markets. 

 

Regards, Frans

Edited by Frans

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And there are even more ways this can work.

@CryptoEri did an interview with Nicholas Steiger. CEO of FlashFX.

Steiger explained that Market Makers are (big) financial players.

There might simply be an institution that somehow has tons of MXN on its hands that it wasn't able to use.

Now it can use that cash.

 

Also, in my last post I showed that Ripple seems to be working on a JPY -MXN corridor.

An MM might have come aboard under the condition that that corridor is one of the next to be opened.

Moneygram CEO Alex Holmes has said, I believe on stage during SWELL, that they were in talks with Japan...

Just thinking out loud here, but this is such a complicated use case that we can only hazard wild guesses.

Regards, Frans   @Jot7684

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On 5/22/2020 at 3:10 PM, Trisky said:

Check the guys recent video where Bitso was guest on a live podcast with all kind of BTC maxi's. Fun to watch the ignorance about the MXN/XRP corridor and XRP in general. 

What video is this? Never seen it.

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@Frans

"To clarify this:  what you're asking is that since Moneygram has to do the exact same thing, send USD to MXN Peso, why bother at all ?

If that a fair representation of what you're asking ?

I just noticed I should add @Jot7684 here, since he started this thread..."

That's a big part of my question, yes. I will have to spend some time reviewing all the ideas and suggested content. It's clear to me now that I actually don't understand much of the traditional rail system, so I think I'll look more into that too. Thank you very much all for the different perspectives!

@KarmaCoverage, that's a really good visual representation. Makes it really clear!

@Dogowner5, a power function is a really elegant mathematical way to state the potential connectivity of the network. I personally think it will be a modified power function with an impressive growth curve, but not near the theoretical limit. I would guess that each corridor will have a different flow rate. Some may be open but practically do very little business in corridors that don't interest them. For instance, I can't think that a theoretical corridor in South Africa would have much interest in a Finnish endpoint. But then again, there may unheard of corridors that simply explode. As another example, I could see the Indian corridor opening up dramatically to a lot of countries in the world where traditional rails aren't well situated.

Anyway, I've got a lot of reading and learning to do with all the responses. Thanks!

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30 minutes ago, Jot7684 said:

I would guess that each corridor will have a different flow rate. Some may be open but practically do very little business in corridors that don't interest them. For instance, I can't think that a theoretical corridor in South Africa would have much interest in a Finnish endpoint. But then again, there may unheard of corridors that simply explode. As another example, I could see the Indian corridor opening up dramatically to a lot of countries in the world where traditional rails aren't well situated.

I agree completely.  It’s not going to be at its theoretical limit for sure.  And quirks and unexpected synergies might occur.

For instance I don’t think anyone (including Ripple) expected that EUR USD would be used this early. (If ever)

On another note...   I’ve found the @ sign doesn’t always trigger a username especially if accessed via a pull down or non-symbol layout.  If they don’t go highlighted they will not send a notification to that user.  So perhaps try hitting @ from differing methods.

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