This is a short snippet from a recent XRP Ninja post. We encourage you to check out r0bertz’s blog for more articles like this one.
The MM (ILP connector) will hold XRP.
The MM will buy any fiat currency with XRP if they need to pay in that currency, and it will sell any fiat currency for XRP if that currency is not immediately needed.
One argument against this is MM can hold USD.
I disagree. Because:
- USD is inflationary, XRP is deflationary
- XRP has some features which make it a better bridging currency on ILP:
- Autobridging https://ripple.com/dev-blog/introducing-offer-autobridging/
- Escrow https://ripple.com/build/amendments/#escrow
- XRP reduces cost, see this graph
Please visit the XRP Nijna for more information.