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An ODL update (Dec 2020)


jbjnr
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I wonder if it another test period for a different company done more discretely, moving treasury amounts in USD/MEX?  Another potential reason for that particular corner dipping is that Walmart has recently decided to use it's own app, Cashi, for low cost remittances US-Mexico (only).  This puts them in direct competition at the same counter in the store that MGI &WU offer their services at.  Is this the kind of drop that would be seen before such an announcement?

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19 minutes ago, WrathofKahneman said:

I wonder if it another test period for a different company done more discretely, moving treasury amounts in USD/MEX?  Another potential reason for that particular corner dipping is that Walmart has recently decided to use it's own app, Cashi, for low cost remittances US-Mexico (only).  This puts them in direct competition at the same counter in the store that MGI &WU offer their services at.  Is this the kind of drop that would be seen before such an announcement?

A drop, yes why not - but an almost complete shutdown of at least 3 corridors? (by corridor I mean tagged destination on exchange) -  to me this hints of something more serious going on. If I hadn't heard that podcast the other day, I wouldn't be too worried, but ...

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10 hours ago, jbjnr said:

XRP is volatile and they'd be taking on potentially massive costs in holding XRP - especially now when it is falling. Ripple have gone to huge lengths to build a business that allows MGI to buy/sell with almost zero volatility risk - why ditch that?

My view of how LoC would work has always been that it’s intended to reduce price volatility for the customers. One way it could work is the lending is always done on functional currency. Say $10K borrowed by Viamericas for 2 days. Ripple gives them XRP worth $10K and when the loan is paid, it’s paid by XRP worth $10K. Ripple would foot the volatility in this scenario but they have huge exposure to volatility anyway. another $10K or for that matter $100M isn’t going to make a dent. 

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10 hours ago, jbjnr said:

LoC is a good suggestion - thanks also to @lll_lll for the tip - however, we're talking about ODL corridors that (we think) have been used for remittance (at least MXN/PHP, not sure about the AUD one).

Aren’t certain destination code associated with certain customers? Can we check with ones are missing compared to before?

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3 hours ago, jbjnr said:

If I hadn't heard that podcast the other day, I wouldn't be too worried, but ...

Which podcast was that good sir?

This drop worries me a bit.  But on the other hand I think there was some consternation in Ripple customers at how much data we were seeing.  I do feel there was pressure for a masking option.  Maybe that is what is happening.

One way I can think of is the 2FA code option.  The dest tag is generated on the fly and known (in that moment) by both ends.  That would somewhat negate tag matching.

Amount matching could also be masked by blending with a Ripple sourced amounts that are later reconciled and balanced.

So perhaps we are seeing a shift to a more sophisticated masked transfer.

Or maybe it really is bad news.  Dunno but very interested to see.

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The one key ODL metric which cannot be masked nor hidden, is the trade of XRP into MXN at Bitso.

( see chart below )
One possible scenario which fits the scant clues we are observing recently, might go like this...

  • Market makers are contracted to support specific levels of liquidity for a specific duration of time
  • Usage of ODL by clients (eg MGI) are coordinated based on the known MM contracted capacity limits 
  • The current MM contract which had boosted the capacity just expired, it was set for six weeks (see chart)

Note the last week of the (hypothesized) MM contract(s), it almost looks like they were trying to use up some remaining quota of liquidity as the contract period neared its end date. 

If there will be new MM contracts to go online soon, we'd expect there to be some preparation of all parties to be ready to ramp up their ODL usage, in coordination for the next period of MM provided liquidity to come online. 

Coordinating multiple parties, during our holiday and pandemic impacted environment, has got to be tricky and time consuming.

If we see soon a resumption of the higher volume of trades seen in the Bitso corridor, it would strengthen my belief that this is all a methodical and orchestrated rollout of the ODL capacity and expansion of usage. And we'll have just entered the next phase.

Time will tell, eh mates ?

2004540972_ScreenShot2020-12-15at1_14_37PM.thumb.png.4395afa9c8f4c770d5a72185a420c9e6.png 
 

Edited by JASCoder
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39 minutes ago, BillyOckham said:

Which podcast was that good sir?

Apologies - it was this interview on youtube with some chap from uphold who I don't know, but it was very interesting and at around the 30 minute mark there is a small bit on regulation - https://www.youtube.com/watch?v=FGqo5IIgRCY he doesn't say they've been reprimanded, but rather expresses frustration at how the system is failing them despite their best efforts to be compliant.

Edited by jbjnr
edit - starts at about 25 mins actually (I just skimmed through it again to check)
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3 minutes ago, JASCoder said:
  • Market makers are contracted to support specific levels of liquidity for a specific duration of time

One thing I forgot to mention that does partially support this hypothesis, is that the drop we've just seen is almost exactly six months after the change they made from treasury to smaller payments at the start of June (a week or so out, but we don't really know exactly when things change). It may be that in early June a 6 month contract for activities was arranged and we've just come to the end of it.

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1 hour ago, JASCoder said:

The one key ODL metric which cannot be masked nor hidden, is the trade of XRP into MXN at Bitso.

( see chart below )
One possible scenario which fits the scant clues we are observing recently, might go like this...

  • Market makers are contracted to support specific levels of liquidity for a specific duration of time
  • Usage of ODL by clients (eg MGI) are coordinated based on the known MM contracted capacity limits 
  • The current MM contract which had boosted the capacity just expired, it was set for six weeks (see chart)

Note the last week of the (hypothesized) MM contract(s), it almost looks like they were trying to use up some remaining quota of liquidity as the contract period neared its end date. 

If there will be new MM contracts to go online soon, we'd expect there to be some preparation of all parties to be ready to ramp up their ODL usage, in coordination for the next period of MM provided liquidity to come online. 

Coordinating multiple parties, during our holiday and pandemic impacted environment, has got to me tricky and time consuming.

If we see soon a resumption of the higher volume of trades seen in the Bitso corridor, it would strengthen my belief that this is all a methodical and orchestrated rollout of the ODL capacity and expansion of usage. And we'll have just entered the next phase.

Time will tell, eh mates ?

2004540972_ScreenShot2020-12-15at1_14_37PM.thumb.png.4395afa9c8f4c770d5a72185a420c9e6.png 
 

It'd be interesting to review this chart based on $ amounts. XRP's recent rise started on 20-Nov. So while XRP based volumes clearly decreased recently, the USD amounts haven't (at least not with the same dynamic).

 

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52 minutes ago, TplusZero said:

It'd be interesting to review this chart based on $ amounts. XRP's recent rise started on 20-Nov. So while XRP based volumes clearly decreased recently, the USD amounts haven't (at least not with the same dynamic).

 

I hear ya, friend :)
This is a task on my Dream TODO List - But...
I've convinced myself - for now - that the current price and remittences on this corridor, is not directly impacting ODL's trade volume.
However, this could change at any time, like entering full production mode, when all tests and validation phases are complete.

FWIW, I've worked in deployment projects, dealing with "live stress testing," sometimes you have no choice when scaling up complex systems. Just look at the online gaming industry.

Cheers

Edited by JASCoder
wording
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I was thinking and we wouldn't know for sometime if the ODL drop had to do with the recent hack on the American treasury and commerce department. It may have caused and cease desist. Just a thought and I'm pulling at strings there.  This would have put it on or before 12/12, or at least that is when notifications would have been notified.

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1 hour ago, peanut56 said:

I was thinking and we wouldn't know for sometime if the ODL drop had to do with the recent hack on the American treasury and commerce department. It may have caused and cease desist. Just a thought and I'm pulling at strings there.  This would have put it on or before 12/12, or at least that is when notifications would have been notified.

Interesting... why do you think that would have an impact?

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15 hours ago, jbjnr said:

One thing I forgot to mention that does partially support this hypothesis, is that the drop we've just seen is almost exactly six months after the change they made from treasury to smaller payments at the start of June (a week or so out, but we don't really know exactly when things change). It may be that in early June a 6 month contract for activities was arranged and we've just come to the end of it.

I suspect that this is probably what is going on. However, not working in this field, I have a naive question:

Is it normal for a company like Ripple to pay Market Makers to provide liquidity? I would just have assumed that the market makers would do this without incentive because it is profitable for them. I can understand that there might be one-time costs associated with transitioning to a new platform, and that an initial one-time incentive might be required. But, if after 6 months, the MM left because their contract was up, this seems to suggest that it is not profitable to continue providing liquidity for ODL.

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