What if Ripple minted the entire XRP escrow into Flare FXRP?

[PunishmentOfLuxury 1,967]

I've been trying to think how the Flare system might be gamed, and this thought came up after listening to the latest Mickey B Fresh YT piece.

NB: Ripple will not get FLR from the airdrop.

What incentive would Ripple have to mint FXRP with the 1 billion XRP per month released from escrow? They could lose 5% XRP to the agent in fees (though no doubt they could set themselves up as an agent). In return they would gain a large amount of FLR from the inflation rewards pool. They would force the agent(s) to buy lots of FLR (2.5x the value of the XRP) to back the FXRP, which might increase the price of FLR enough to compensate them for the 5% fee. They would gain FTSO votes, but no direct rewards from that, unless the signal provider compensated them. They would probably get a lot of influence over the direction of development of smart contracts on Flare, and in other ecosystems built on top of it. They could easily create their own stablecoin for transfer back to the XRPL.

Any other benefits I've missed? Any drawbacks?

Would such a strategy even allow Ripple to eventually amass so many FLR that they come to dominate the network? Unlikely, is my hunch.

[KarmaCoverage 4,494]

Good thinking. In a way, given the multiplier effect on XRP'S utility value, it would make sense for Ripple to want to mint FLR. Im sure they could make a SC to do XRP Loans in some way, or new ways.

Other types of financial service/apps/smart contracts will surely follow

[tulo 3,333]

6 hours ago, PunishmentOfLuxury said:

They could lose 5% XRP to the agent in fees

Any pointer to this number I see continuously? I've never read this anywhere. Thanks.

[thinlyspread 3,480]

4 hours ago, tulo said:

Any pointer to this number I see continuously? I've never read this anywhere. Thanks.

Yeah I heard this too, but I think it was one of these YouTubers who pretend to know everything and then put out misinfo. I don't think it's that high – surely it can't be right?! 

[thinlyspread 3,480]

11 hours ago, PunishmentOfLuxury said:

What incentive would Ripple have to mint FXRP with the 1 billion XRP per month released from escrow?

General liquidity from Flare coming into the XRP ledger's DEX. 

[brianwalden 4,213]

@tulo and @thinlyspread 5% is the example they use in their papers. I don't know that it will be the actual rate. If you do a search for "5%" here there's a couple of examples: https://flare.ghost.io/fxrp-walkthru/

 

[KarmaCoverage 4,494]

13 minutes ago, brianwalden said:

@tulo and @thinlyspread 5% is the example they use in their papers. I don't know that it will be the actual rate. If you do a search for "5%" here there's a couple of examples: https://flare.ghost.io/fxrp-walkthru/

 

I dont think that 5% is a realistic spread. Likley just used for a simple example.

Most of the beta examples for Flare Finance (I'm not double checking this, just memory) are more like 0.001% - 0.003%

Edited February 13 by KarmaCoverage

[brianwalden 4,213]

Yeah a lot of the details are missing from the Flare Network papers. We get the basic concept, but not how it will exactly work. And if you read through them, things have changed a lot since the beginning, this is still being fleshed out.

I hope I can take part in the FF public beta and I hope FN has a public beta too.

[tulo 3,333]

1 hour ago, brianwalden said:

Yeah a lot of the details are missing from the Flare Network papers. We get the basic concept, but not how it will exactly work. And if you read through them, things have changed a lot since the beginning, this is still being fleshed out.

I hope I can take part in the FF public beta and I hope FN has a public beta too.

In all the papers there are the details, but the correct/final numbers are not there. They are left as parameter. I believe 5% is only as an easy example. For sure easier than 0.15%.

[Flintstone 7,891]

1 hour ago, brianwalden said:

I hope I can take part in the FF public beta and I hope FN has a public beta too.

Keep an eye out for the @everyone announcements on Discord.

You’ll also want to install MetaMask 😉

[thinlyspread 3,480]

2 hours ago, KarmaCoverage said:

I dont think that 5% is a realistic spread. Likley just used for a simple example.

Yeah that's my hunch too. I reckon a lot of these numbers are going to come down to governance. (And the governance model is great, btw.)

[PunishmentOfLuxury 1,967]

A 5% fee would seriously discourage me from minting FXRP, I hope it's much lower. Plus I would want to see the agent non-redemption penalty system in action before I risked serious numbers of XRP.

[KarmaCoverage 4,494]

Minting FXRP is kin to a type of monetary policy. Addition/subtraction of economic utility. The more FXRP the more the smart contract/ defi apps can service. 

[Seoulite 2,035]

@PunishmentOfLuxury what are your thoughts about Mickey's suggestion that Ripple turn the escrow into an algorithmic reward system like the Flare incentive system?

[Seoulite 2,035]

On 2/13/2021 at 11:54 AM, PunishmentOfLuxury said:

Any other benefits I've missed? Any drawbacks?

A big drawback is having Ripple as a very big fish in the pond. For all the talk of the XRPL being independent, Ripple is still the biggest fish in the pond by a long way and all the other fish have to keep an eye on it. I don't want Flare to become the same.  I think it was very smart for Flare to cut Ripple out of the network as much as they could. One of the things that makes me bullish on Flare is that it is NOT reliant on Ripple or XRP, and that will become more true as time goes by.

Do I want a significant chunk of the Flare network to be in the hands of Brad "I'm long XRP (sell! sell! sell!)" Garlinghouse? No. Stay away. You've got enough money. Keep your hands off.

Edited February 14 by Seoulite