Ripple - What does a Market Maker do?

interesting. so ripple is in the business of liquidity providing.

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When I look from the perspective of time with the issues people used to have about NuBits, about trusting to get their USD/BTC etc. back in exchange for the NBT they bought, Nu network’s trust grows over time with the efforts of the dev team and the Nu community. With Ripple trust is much more essential, as one needs to trust Ripple Labs to maintain the protocol, the gateways to redeem fiat or cryptocurrencies (which are considered to be outside of the network), the users (within the network). Market Makers are supposed to be the users who would grant trust to different gateways (which usually don’t trust each other), MM provide this kind of liquidity and are exposing themselves to gateway default risk. For allowing rippling through their trust lines they receive a small profit resulting from the spread (they’re the ones setting the exchange rate for IOUs from the two different gateways, e.g. +1%, but it needs to be competitive, as Ripple will choose the cheapest option).


Has anyone run a ripple gateway and is familiar with the system? Could a ripple gateway issue NuBits? As far as I understand Ripple is supposed to be currency agnostic.


Familiar yes, run a gateway no, but I’ve been researching such an option recently in the context of NuBits, among other. Gateways are closer to being an exchange that deals with both crytpocurrencies and especially fiat currencies, rather than being entities within the Ripple protocol. This means that security is a important issue here.

how would you compare Nu and Ripple?

They are working on some things. written in JS…

wo. nice catch.
so ripple has somehow copied the idea of creating artificial walls to provide liquidity between xrp and fiat, we can speculate.
the question is : liquidity at what ripple level price?
if ripple is not pegged to something, it does not make so much sense, at least at first glance.
more over, what is the incentive for providers to do so?

we can see Nu with its decentralized voting system is quite unique and has already a first mover advantage.
now it is even more important to open the source code so that Nu can attract even more talented elements.

There are numerous differences between the two networks, both on the conceptual and technical side. It would be shorter to show the similarities :slight_smile: What’s most appealing to me (especially that I’m not the right person for technical discussions…) is that the Nu network relies on separation of the speculative element (NuShares) and the store/ transmitter -of-value element (NuBits), whereas Ripple is in itself a speculative element and a store/transmitter-of-value. It’s an advantage to have the two elements separated.

To quote one of the RippleLabs employee:

“BitCoiners believe that as long as the demand to use BitCoin (<-- the system) keeps increasing, the price of BTC (<-- the currency) will keep increasing. That is a logical statement when it comes to the BitCoin world. However, that logic doesn’t apply at all to Ripple (<-- the system). There is an unlimited supple of an unbounded number of different currencies. Since you can hold any currency and make payments in any other currency, no currency (including XRP) has transactional advantages over any other. So as the Ripple System economy increases that puts no upward pressure on the price of XRP.”

This was taken from a discussion about the “threat” of XRP increasing in value, it’s interesting in itself, but this is the most interesting point: There is an unlimited supple of an unbounded number of different currencies. As with Nu network, an additional number of NuBits may be created as a result of consensus among shareholders, in the Ripple network, new currencies (and new quantities of a given currency) can be created by gateways. Will this be a healthy situation in the future, as the XRP network grows? It’s still an experiment, just like Nu is an experiment, but I perceive Ripple to be more of a commercial experiment, with a company standing behind it, with centralization and a massive amount of trust needed, especially in terms of gateways. The fact of a company maintaining the network and having control over it might be a strong element for banks to consider working with such a network, of implementing the protocol for their accounting systems. The German Fidor Bank has done it. For me, a stronger argument in favour is the way Nu was designed to work, it’s obviously decentralized, and distributed, autonomous, a DAB, with B standing for bank :wink:

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DAB is a nice naming.

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there actually is a DAB-Bank already …


From what I remember the DAB term was coined by @masterOfDisaster, in one of the chats at in the early days of the Nu (later summarized in this thread Additional types of custodians ), mOD is a great proponent of the network (I hope that you’ll read this and have a surprise, we need to chat :slight_smile: ).

With regard to Ripple, I read a hilarious statement yesterday, that if the FED wanted to join the XRP environment, they would become the biggest gateway, despite their third round of QE programme coming to an end.

For a smooth finish of the week, this is what a kind person has shared with me (found somewhere on ZapChain):

A Bitcoin guy, an Ethereum guy, a Ripple guy, and a Stellar guy meet at the top of a mountain and the Bitcoin guy screems “this is for my people!” and he jumps off the mountain, the Ethereum guy goes “this is for my people!” and he jumps off the mountain, then the Stellar guy goes “this is for my people!” and he pushes the Ripple guy…

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