Reportedly, tracking XRP liquidity is important to support the direction of On-Demand liquidity (ODL) service. Cross border payments as facilitated by ODL leverages XRP to source destination currencies right at the time of the payment.
In a cross border payment process between two currencies in a trading pair, XRP is used as the bridge in the process. Ripple Engineering, explores the implied FX rate, which is the FX rate implied by the pair of trades that is bridged by the XRP.
This they feel is important because as they continued to provide cross border payment services, it was not enough to just compare the rates. They felt it was important to differentiate between the Spot FX rates and Implied FX rates.
Competitiveness, capacity and the relative liquidity efficiencies of the origin exchange and destination exchange are to be considered. This is also a reason, which limits the flexibility of leveraging other sources of XRP.
They have therefore used a dislocation metrics to assess the depth of liquidity at exchanges. When multiple exchanges are involved there will be a significant impact in the price. Different exchanges have different rates and therefore arriving at a global price for XRP-fiat trading pairs is difficult.
To explain this best Ripple Engineering are proposing a concept: “Dislocation is then the competitiveness of an exchange’s XRP-fiat price to the XRP reference price in that fiat. Dislocation is the zero-order model of the price quality of an exchange, ignoring the structural details of the order book and the size of the payment.”
Talking in this regard, Sydney Ifergan, the crypto expert tweeted: “Ripple (XRP) are transacting huge volumes and therefore dislocation metrics is used to arrive at a global price despite differences in price between multiple exchanges.”
Ripple (XRP) Community Alerts and Snippet News
Regarding Regulatory Clarity: Community member asked Garlinghouse on who orwhat entity do the banks need to create regulatory clarity and what regulations specifically?
Of note, Brad Garlinghouse does not have any doubt about banks using these technologies once regulatory clarity is achieved.
Institutional Adoption and DeFi: One of the community member pointed to how there is a continued rise of institutional adoption and DeFi marked crypto markets in Q3. It is very obvious that crypto sustainability is finally getting attention,
Ripple as a Green Currency: Ripple are also establishing environmental friendliness by establishing that they are trying to reduce the carbon foot print. They seem to be aging well.
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