The Ripple Engineering team recently explained about why understanding liquidity dynamics in the different markets might be the key to having a successful product.
They have recently published about Implied FX rates as being an early measure of liquidity. To determine the FX rate, the following details are required: “The price of selling USD and buying XRP, i.e., the XRP/USD ask price, for the payment size after transaction fees, and the price of selling XRP and buying MXN, i.e., the XRP/MXN bid price, for the amount of XRP acquired in step #1 above after transaction fees.”
Sydney Ifergan, the crypto expert tweeted: “Implied FX as explained by Ripple Engineering is interesting. It makes sense to think about the fiat-to-fiat Fx rate which is achieved by bridging with intermediary currency.”
A primary measure of liquidity is very important in cross border remittance industry and the formula can be super useful for end users. This is considered to be better than the proxy for liquidity, which is taken from the daily exchange volume; however, implied FX beats the challenges of the liquidity proxy which is mostly misreported or inflated volumes in the exchanges.
Implied FX is not the ultimate, Ripple Engineers are working to come up with a new multi-dimensional visualization of liquidity considering different factors.
They have also discussed about order books with special focus to market orders and limit orders. “A market order is an instruction to buy or sell an asset immediately for the best price. A limit order is an instruction to buy or sell a specific quantity at a specific price or better.”
Ripple are continuing in their mission to ensure liquidity for everyone by bringing in their product called product called RippleNet’s On-Demand Liquidity service, or ODL. Traditional money remittance models are slowly being pushed to the back seat due to the expense
Ripple (XRP) Regulatory Clarity
While all the talks are on, investors are only considered about whether the liquidity will provide for a stable price for XRP. The price status of XRP is not really satisfying investors. There is no denying about XRP facilitating the cheapest transfers so far.
Brad Garlinghouse recently tweeted: “Thank you @TomEmmer and @DigitalChamber’s PAC for hosting today’s Crypto Town Hall (hopefully the first of many). Conversations like this with elected officials and industry participants are a key step to achieving regulatory clarity, where all boats can rise!”
Regulatory clarity is expected to add to XRP price; however, we need to see how reality unfolds.