XRP's Counterparty Rippling (sending of liabilities) Explained

2 years ago
5

People get you can send an asset to settle up financially (i.e. you give $100 to someone you owe money to) but the opposite transactions works too where the person you owe money to sends YOU a liability instead of you sending an asset...hence "rippling".

The neat thing here is the person who accepts the IOU (i.e. the lender) MUST pre-agree to trust all counterparties, specify the amount they trust [whatever] counterparty, and pre-agree to let their IOU ripple from trusted counterparty to trusted counterparty.

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