Fund Instant Cross-Border Payments With a Line of Credit From RippleNet

[BillyOckham 3,468]

50 minutes ago, pucksterpete said:

@BillyOckham let's ask the experts, is it okay to quote you on twitter?

Well to be honest I prefer a lower profile but this is a public forum so anything I say here is publicly quotable.  
 

Up to you how to handle it but I thank you for the courtesy and consideration of asking.  

[pucksterpete 1,679]

i'm trying to tweet thread this out, but keep getting "Something went wrong, but don’t fret — let’s give it another shot."

wtf

[wogojump 259]

4 hours ago, BillyOckham said:

Actually I’m worried it’s the reverse.  
 

Previously any ODL would involve a buy and a sell on public exchanges.  In the line of credit cases the critical change (to us) is that the buy is done from Ripples wallets.  So the sell will remain without the corresponding buy pressure.  (Differing exchanges but assuming arbitrage across all exchanges...)

 

This seems to be a “Ripple will be funding some (many?) SME’s growth in the next periods via private XRP sales and removing that buy pressure from public exchanges”.   They will be acquiring Fiat and offloading XRP.  
 

The fact that they removed the public buy side pressure in these line of credit cases doesn’t seem to talked about yet.  Are we all keeping quiet about it hoping it goes away somehow?  Admittedly the volumes thus far are insignificant,   but if this catches on...

I agree, this is the case.  I thought Ripple was also bundling some of their sale agreements in the past, directly selling their XRP to customers.  I am not positive on this. 

Either way, customers buying XRP from Ripple will not increase buying pressure of XRP on the open market.  Best case scenario for XRP price, would be majority of Ripple customers continue to use the XRP long term, rather than selling XRP on the open market after a few years and dragging down the price.

One of the other factors to consider for XRP price, is the mistake Ripple made with Jed McCaleb sale agreement: https://www.somagnews.com/ripples-former-co-founder-increased-its-xrp-sales/.  He still has a huge stock pile of XRP that will be auto sold every day, for the next ~2-6 years.  His agreement is setup for him to sell 1.5 percent of the daily XRP volume.  Meaning every time XRP volume is increased, his account puts even more selling pressure on the open market. When considering potential impacts of RippleNet line of credit having customers purchase XRP directly from Ripple and increasing XRP volume transactions, this will continue to put significant selling pressure of XRP on the open market. 

Ripple is not very transparent on the above, so the community has to make educated assumptions.  As long as this is true, retail investors should wait to buy and hold XRP ~2-6 years from now, until we get closer to Jed McCaleb XRP holdings getting to zero or evidence of increased buying pressure of XRP on the open market.

[pulstar 60]

8 hours ago, BillyOckham said:

Actually I’m worried it’s the reverse.  
 

Previously any ODL would involve a buy and a sell on public exchanges.  In the line of credit cases the critical change (to us) is that the buy is done from Ripples wallets.  So the sell will remain without the corresponding buy pressure.  (Differing exchanges but assuming arbitrage across all exchanges...)

 

This seems to be a “Ripple will be funding some (many?) SME’s growth in the next periods via private XRP sales and removing that buy pressure from public exchanges”.   They will be acquiring Fiat and offloading XRP.  
 

The fact that they removed the public buy side pressure in these line of credit cases doesn’t seem to talked about yet.  Are we all keeping quiet about it hoping it goes away somehow?  Admittedly the volumes thus far are insignificant,   but if this catches on...

It really comes down to that: If the buy side will be done directly from Ripple's OTC wallets this is nothing but another masked dump ploy from Ripple (1bil Coil cough cough)... I hope this is not the case here, but thinking how "transparent" Ripple has been lately, expectations should remain really... really low

[Duke67 1,911]

On 10/15/2020 at 10:30 AM, pucksterpete said:

Is it that once these RippleNet partners start using XRP between each other, they will be selling their XRP for its last step in the ODL journey on the open markets/corridors with the retail exchanges like we use, is that how it works?

With that we should see a steady rise in XRP price?

The price can rise only if it’s widely seen as a useful digital asset on a useful payment network. ODL and LOC strongly support the usability and usefulness of XRPLedger. I believe Ripple will make the LOC product “two-way”, not just to quickly distribute their XRPs regardless the overflow of new XRPs on the destination markets, but they also show businesses how efficient, easy and comfortable the technology is. Businesses will then finally start using it independently from Ripple and will be sourcing XRP from local markets, which will ultimately push the price higher.

In the end, the entire 45B XRP is only valued at about $10B, so it’s actually a tiny droplet in the world economy...

[pucksterpete 1,679]

I hope so.....

[Wolfparty 30]

Is there a possibility we see an increase of XRP bought back by Ripple in correlation with LOC usage?

If there is enough demand outside of LOC the effect could be negligible right? Obviously we would have to reach that threshold, but the addition of Flare, possible stablecoins, and increased ODL could help mitigate that downward pressure.

The pace has seemingly quickened as of late. DLT has established itself and people are starting to notice. Looking forward to the next few months. 

[KarmaCoverage 4,180]

32 minutes ago, Wolfparty said:

Is there a possibility we see an increase of XRP bought back by Ripple in correlation with LOC usage?

Yes, because for Ripple to lend out XRP, they actually need to have it and transfer it into the borrower's wallet. The XRP they have in Escrow is not available for this purpose, therefore they would need to buy or have enough XRP on hand to meet the XRP LoC demand.

[mistatee2000 1,279]

24 minutes ago, KarmaCoverage said:

Yes, because for Ripple to lend out XRP, they actually need to have it and transfer it into the borrower's wallet. The XRP they have in Escrow is not available for this purpose, therefore they would need to buy or have enough XRP on hand to meet the XRP LoC demand.

You are right, though if they were to start releasing the 1billion XRP in escrow every month, it would almost instantly cause havoc in the market. Unless of course demand was huge- so second guessing those consequences would be interesting.

[KarmaCoverage 4,180]

4 minutes ago, mistatee2000 said:

You are right, though if they were to start releasing the 1billion XRP in escrow every month, it would almost instantly cause havoc in the market. Unless of course demand was huge- so second guessing those consequences would be interesting.

I would view that is somewhat of a Monetary Policy decision. It is prudent to "keep your powder dry", for when the sh!t hits the fan for real. Ripple has already been burned by selling XRP early and on the cheap. 

[wogojump 259]

2 hours ago, Wolfparty said:

Is there a possibility we see an increase of XRP bought back by Ripple in correlation with LOC usage?

If there is enough demand outside of LOC the effect could be negligible right? Obviously we would have to reach that threshold, but the addition of Flare, possible stablecoins, and increased ODL could help mitigate that downward pressure.

The pace has seemingly quickened as of late. DLT has established itself and people are starting to notice. Looking forward to the next few months. 

It is possible, but I am expecting very low probability in near future.  A few reasons:

1. Ripple in the past has clearly shown they are more motivated to sell XRP, rather than buy.  

2. Ripple as an organization being profitable in the past, has been dependent on profits from them selling XRP.

3. Other than impacts to retail investor and sentiment, it would be a bad business decision for them to buy XRP back in short term.  In order for Ripple to hit their internal goals, they need to grow and make profits.  Spending money on buying XRP would be counter productive towards these goals.

 

Ripple and a lot of others, don't like to compare XRP to stocks.  In reality, there are a lot of similarities based between how XRP and stocks are used for funding businesses.  In the stock environment, it is common for more established organizations to buy back their own stock once they are established with consistent profits, in order to increase stock price and investor sentiment.

[ZeeperCreeper 860]

1 hour ago, wogojump said:

It is possible, but I am expecting very low probability in near future.  A few reasons:

1. Ripple in the past has clearly shown they are more motivated to sell XRP, rather than buy.  

Wasn't it revealed in the Q2 XRP markets report (or was it Q1) that Ripple has actually been buying XRP from open market?

[doopers 90]

1 hour ago, ZeeperCreeper said:

Wasn't it revealed in the Q2 XRP markets report (or was it Q1) that Ripple has actually been buying XRP from open market?

Not only that, but they revealed they were buying XRP to help stabilize the price. We're all guessing here, but my guess is that Ripple's buying will increase to account for the XRP that is being released into the market through ODL. Given that the XRP is given out as part of a loan, it's easy to imagine them being able to simultaneously make a profit on the XRP loaned and buy back X% of that XRP from the open market.

[wogojump 259]

3 hours ago, ZeeperCreeper said:

Wasn't it revealed in the Q2 XRP markets report (or was it Q1) that Ripple has actually been buying XRP from open market?

Looks like the following was mentioned. 

https://ripple.com/insights/q2-2020-xrp-markets-report/

A healthy, orderly XRP market is required to minimize cost and risk for customers, and Ripple plays a responsible role in the liquidity process. As more financial institutions leverage RippleNet’s ODL service, more liquidity is added into the XRP market. That said, Ripple has been a buyer in the secondary market and may continue to undertake purchases in the future at market prices.

 

Hard to tell based on the wording, so maybe I am wrong? Secondary market is commonly used as a stock definition like NYSE, NASDAQ, etc.  Maybe they are buying XRP from exchanges like Binance?

This is unclear on who exactly they purchased XRP from, how often/when, at what prices, etc.? They mentioned "and may continue to undertake purchases in the future at market prices" My interpretation is they have not yet bought XRP from retail investors at market prices.  Rather they somehow have been buying XRP from their customers at prices that are lower than the general market trading value, in order to balance out liquidity between the financial institutions on RippleNet's ODL service.

Also we would need to better understand Ripple's exact net sales vs. net purchases of XRP at a given time, to better understand.  They could easily fudge the details when not disclosing specific numbers.  For example if they said they bought XRP in Q4 (but they only bought 100 XRP), while simultaneously increasing their sales of XRP by 5 times.  Then for all intents and purposes, they didn't really play a part in buying XRP.

 

Edited October 16, 2020 by wogojump

[BillyOckham 3,468]

23 minutes ago, wogojump said:

Looks like the following was mentioned. 

https://ripple.com/insights/q2-2020-xrp-markets-report/

A healthy, orderly XRP market is required to minimize cost and risk for customers, and Ripple plays a responsible role in the liquidity process. As more financial institutions leverage RippleNet’s ODL service, more liquidity is added into the XRP market. That said, Ripple has been a buyer in the secondary market and may continue to undertake purchases in the future at market prices.

 

Hard to tell based on the wording, so maybe I am wrong? Secondary market is commonly used as a stock definition like NYSE, NASDAQ, etc.  Maybe they are buying XRP from exchanges like Binance?

This is unclear on who exactly they purchased XRP from, how often/when, at what prices, etc.? They mentioned "and may continue to undertake purchases in the future at market prices" My interpretation is they have not yet bought XRP from retail investors at market prices.  Rather they somehow have been buying XRP from their customers at prices that are lower than the general market trading value, in order to balance out liquidity between the financial institutions on RippleNet's ODL service.

Also we would need to better understand Ripple's exact net sales vs. net purchases of XRP at a given time, to better understand.  They could easily fudge the details when not disclosing specific numbers.  For example if they said they bought XRP in Q4 (but they only bought 100 XRP), while simultaneously increasing their sales of XRP by 5 times.  Then for all intents and purposes, they didn't really play a part in buying XRP.

 

My read of that at the time, and still now,  is that because Ripple are starting ODL in unbalanced corridors,  the Market Makers at Bitso and elsewhere are accumulating XRP.   To limit the unbalanced selling of those acquired XRP,  Ripple are stepping in and buying them from the Market Makers at market price.

This would mean that the MMs are getting a fair price (better than they could if they sold in volume and slippage walked the price down) and Ripple are supporting the market until the balance arrives organically.
 

I imagine this was a bigger thing back when ODL was doing treasury payments.  I would guess that the need has pretty much gone away now that the volumes are much reduced.

 

On the Line Of Credit....  I do not see how you guys are assuming that means Ripple will be buying them back??  That doesn’t make sense to me.  Ripple loan their XRP and get Fiat for them later.  No buying back is necessary or implicit in that.

Also the monthly releases (remainder after re-escrow) plus what is already stock in hand is more than able to handle this Line of Credit in these early days I would imagine.

 

I think at times many of us here build castles in the sky based on flimsy evidence.