Interledger Exchange

[brianwalden]

So with Interledger a market maker who has bank accounts in different countries can publish his exchange rates which allows money to ripple (pardon the older terminology) through his accounts. Someone could then build an aggregator that collects all the published rates and displays them as buy/sell charts. Could an exchange be built entirely from the methods in the Interledger protocol? No one would control the exchange, you would be able trade directly from your accounts without depositing and withdrawing to exchanges. Potentially anything that can be represented as a balance on a ledger could be traded. Am I overlooking some reason why this wouldn't work? Or is this the next logical step once Interledger starts being adopted?

[pftq]

That's basically RCL (vanilla Ripple Consensus Ledger) in a nutshell, not even Interledger.  Ripple already does everything you just said - that's where RippleCharts and anyone connecting to Ripple is getting bid/asks etc (it's built into Ripple).  It's why it's pretty disappointing that Ripple has only focused on the transaction speed aspect when they could actually be a full on decentralized exchange.  I wrote about this a while back here:

https://www.pftq.com/blabberbox/?page=The_True_Potential_of_Ripple_and_XRP

Interledger is a sort of a half-way step imo.  It is meant to connect different blockchains and avoid forcing everyone to be on RCL.

Edited June 3, 2017 by pftq

[brianwalden]

To me Interledger isn't a halfway measure; it's the RCL abstracted so that any ledger in the world can join the network. The RCL is a particular implementation of Interledger which I'm sure will have it's use cases (one being people like you and me who want to create an ILP ledger but don't want to have to do all the coding can just issue a currency on the RCL). The reason the exchange idea cross my mind is precisely because to me Interledger looks like the RCL writ large, so it only makes sense that it would be used for an exchange.

[Mercury]

The only issue would be trust of course. People need to know that you have what you say you have, or that you are really offering the same thing they are trying to trade. An exchange that verifies a person and operates under regulation enforcement is assumed to be operating in good and ensured faith.

[brianwalden]

You wouldn't need exchanges for trust. You would trust the individual ledgers you have an account on. If want to trade bitcoin, you get an account on the bitcoin ledger. If you want to trade USD, you get an account on the ledger at the bank you trust, or PayPal or whatever.

[Guest]

i'm going to bump this thread because it touches on something discussed in the chatbox and also something i keep annoying mr @tulo about (sorry mate!)

i don't see how two exchanges can move (examples) xbt.gatehub to xbt.bitstamp "instantly" on ILP when exchanges surely REQUIRE (legally if not for security reasons) that the actual asset is held on their books

also, isn't it technically a cross-asset exchange anyway? if so you'd need both exchanges to explicitly trust one another (why?) for a 1:1 valuation -- why would one exchange accept the other's issuance if they can't hold the original asset on books? how does an ILP connector solve this problem of efficiency/trust?

i don't see how moving XBT or issuances about on bitcoin exchanges solves the problem of time/efficiency, because you'd have to have a market maker always with accounts on BOTH foreign/local exchanges AND still be able to pay out (withdraw) to someone else's bank account (or have someone do that part)

we still have the problem of real-time liquidity anywhere, anytime

whereas if you use XRP (or something as quick), they only need XRP plus ONE local account, and can be anywhere and receive funding in 4 secs to swap into their local currency at the exchange... otherwise how would they get the XBT issued on the local exchange? they'd have to have it already there, and at the other exchange... which defeats the point... what if they need a top-up, what if they need to withdraw? again, see para 2/3 as well...

please someone correct me where I'm wrong!

@brianwalden @Mercury @tommytrain @TiffanyHayden @warpaul @JoelKatz etc...

[XRPage]

6 minutes ago, zerpdigger said:

@brianwalden @Mercury @tommytrain @TiffanyHayden @warpaul @JoelKatz etc...

wow, you summoned the big army! 

Would't it be enough by putting those XBT in escrow? That way you make sure the exchange A has the funds when trading with exchange B...

[tulo]

38 minutes ago, zerpdigger said:

i'm going to bump this thread because it touches on something discussed in the chatbox and also something i keep annoying mr @tulo about (sorry mate!)

i don't see how two exchanges can move (examples) xbt.gatehub to xbt.bitstamp "instantly" on ILP when exchanges surely REQUIRE (legally if not for security reasons) that the actual asset is held on their books

also, isn't it technically a cross-asset exchange anyway? if so you'd need both exchanges to explicitly trust one another (why?) for a 1:1 valuation -- why would one exchange accept the other's issuance if they can't hold the original asset on books? how does an ILP connector solve this problem of efficiency/trust?

i don't see how moving XBT or issuances about on bitcoin exchanges solves the problem of time/efficiency, because you'd have to have a market maker always with accounts on BOTH foreign/local exchanges AND still be able to pay out (withdraw) to someone else's bank account (or have someone do that part)

we still have the problem of real-time liquidity anywhere, anytime

whereas if you use XRP (or something as quick), they only need XRP plus ONE local account, and can be anywhere and receive funding in 4 secs to swap into their local currency at the exchange... otherwise how would they get the XBT issued on the local exchange? they'd have to have it already there, and at the other exchange... which defeats the point... what if they need a top-up, what if they need to withdraw? again, see para 2/3 as well...

please someone correct me where I'm wrong!

@brianwalden @Mercury @tommytrain @TiffanyHayden @warpaul @JoelKatz etc...

Let's take your example.

BTC at Bitstamp and Gatehub, and suppose their ledgers are ILP enabled.

Tulo as market maker can open 2 account both at bitstamp and gatehub. Tulo deposits some BTC in both exchange to have credited on the two private ledgers some BTC.gatehub and BTC.bitstamp. Tulo publishes some ILP quotes, trading BTC.Bitstamp:BTC.gatehub at 1:1.0001 and BTC.gatehub:BTC.Bitstamp at 1:1.0001. ILP will do the magic so that every account on both ledgers can use my liquidity to exchange instantly BTC from the two exchange (with the cost of a tiny fee applied by tulo for the service). No BTC are traded over the native blockchain, but only tokens or BTC IOUs, having a pseudo-instant settlement.

But I expect the fee to be very low, because BTC can be easily rebalanced (it's a digital currency it's so easy to send around) and BTC at the two exchange will have the same value with high probability,

Edited November 7, 2017 by tulo

[tulo]

On 6/3/2017 at 6:39 PM, brianwalden said:

So with Interledger a market maker who has bank accounts in different countries can publish his exchange rates which allows money to ripple (pardon the older terminology) through his accounts. Someone could then build an aggregator that collects all the published rates and displays them as buy/sell charts. Could an exchange be built entirely from the methods in the Interledger protocol? No one would control the exchange, you would be able trade directly from your accounts without depositing and withdrawing to exchanges. Potentially anything that can be represented as a balance on a ledger could be traded. Am I overlooking some reason why this wouldn't work? Or is this the next logical step once Interledger starts being adopted?

Yes, you are right. The problem is the different timing....imagine to have BTC native ledger ILP-enabled. Every trade against it would take 20 min-2 hours. Do you think it's feasible? Remember that ILP trades are limited by the slowest ledger in the chain, so having private centralized ledgers it's like having instantaneous orders, while using publick blockchains you'll have seconds (XRP), minutes or hours.

[Guest]

25 minutes ago, tulo said:

Let's take your example.

BTC at Bitstamp and Gatehub, and suppose their ledgers are ILP enabled.

Tulo as market maker can open 2 account both at bitstamp and gatehub. Tulo deposits some BTC in both exchange to have credited on the two private ledgers some BTC.gatehub and BTC.bitstamp. Tulo publish some ILP quotes, trading BTC.Bitstamp:BTC.gatehub at 1:1.0001 and BTC.gatehub:BTC.Bitstamp at 1:1.0001. ILP will do the magic so that every account on both ledgers can use my liquidity to exchange instantly BTC from the two exchange (with the cost of a tiny fee applied by tulo for the service). No BTC are traded over the native blockchain, but only tokens or BTC IOUs, having a pseudo-instant settlement.

But I expect the fee to be very low, because BTC can be easily rebalanced (it's a digital currency it's so easy to send around) and BTC at the two exchange will have the same value with high probability,

ok, so hang on, what's happening here before? i want to get a full picture for context

what happened to the MXN at the beginning, on one (let's say bitstamp) exchange? we have to convert MXN (the initial funding) first

[Guest]

Basically, someone in Mexico wants to pay someone in USA. They pay Cuallix the MXN funds. What happens next, what's Cuallix's action? Do THEY convert to BTC to MXN or let the MM do everything inc. handle the MXN (and USD all the way to the American customer's account)?

[tulo]

6 minutes ago, zerpdigger said:

ok, so hang on, what's happening here before? i want to get a full picture for context

what happened to the MXN at the beginning, on one (let's say bitstamp) exchange? we have to convert MXN (the initial funding) first

Wait, you asked only how to convert BTC:BTC of two different exchanges via ILP...the full path is a different story

[Guest]

Just now, tulo said:

Wait, you asked only how to convert BTC:BTC of two different exchanges via ILP...the full path is a different story

yeah but that's the point of the thread(s) (at least for me): we are trying to see what Cuallix are doing and "prove" (in our minds) that XRP can(not) act as a superior bridge for payments vs e.g. bitcoin via interledger...

[tulo]

3 minutes ago, zerpdigger said:

Basically, someone in Mexico wants to pay someone in USA. They pay Cuallix the MXN funds. What happens next, what's Cuallix's action? Do THEY convert to BTC to MXN or let the MM do everything inc. handle the MXN (and USD all the way to the American customer's account)?

In my best scenario, a mexican bank should be ILP-connected, so that another ILP connector can exchange MXN.BANKofMEXICO with MXN.Bitso, and the same for the USD bank...so you'd have a smooth and instantaneous ILP payment. Here Cuallix would be only the liquidity provider, depositing MXN at Bitso and putting offers of MXN:XRP to provide the liquidity (their role actually).

[Guest]

1 minute ago, tulo said:

In my best scenario, a mexican bank should be ILP-connected, so that another ILP connector can exchange MXN.BANKofMEXICO with MXN.Bitso, and the same for the USD bank...so you'd have a smooth and instantaneous ILP payment. Here Cuallix would be only the liquidity provider, depositing MXN at Bitso and putting offers of MXN:XRP to provide the liquidity (their role actually).

but you were arguing (at least in the other Cuallix thread) that there's no role for xrp since/if you can use more liquid xbt instead via interledger

the reason i restarted it here is because you mentioned an interledger swap with exchanges -- see my point?

i want to see exactly how this supposed xbt interledger route is better than xrp...