Liquidity Bridging

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Sovereign Assets • Layer 1s • Payment Networks

neutral asset settlement across currencies and chains

Liquidity Bridging refers to the process of moving value or assets quickly and efficiently between different currencies, tokens, or blockchains to facilitate payments, swaps, or settlements. It enables real-time conversion and transfer of funds across various networks, using digital assets like XRP or stablecoins as neutral bridges. Liquidity bridging eliminates the need for direct currency pairs or deep liquidity in every market, unlocking global payments, DeFi, and interoperability across ecosystems.

Use Case: A business in Europe pays a supplier in Mexico using XRP as a bridge asset—converting euros to XRP and then instantly to pesos, settling in seconds without requiring EUR/MXN liquidity on either side.

Key Concepts:

Currency Conversion — Exchanging one currency or token for another, often via a bridge asset
Cross-Border Payments — Payments that move across countries using bridge assets for efficiency
Finality — Ensuring all bridged transfers reach an irreversible, trusted state
Liquidity Pool — Smart contract reserves that supply bridge assets for swaps and settlement
$XRP — Leading bridge currency for cross-border payment corridors
Bridge Currency — Neutral asset used to connect illiquid currency pairs
Stablecoins — Price-stable assets used for bridging and settlement
$RLUSD — Regulated stablecoin for institutional liquidity bridging
Interoperability — Cross-chain connectivity enabling bridge functionality
AMM — Automated Market Makers providing bridge liquidity
Token Interoperability — Asset compatibility across bridge networks
SWIFT Rails — Traditional system that liquidity bridging disrupts

Summary: Liquidity bridging transforms global value transfer by enabling seamless swaps and settlements across currencies, networks, and assets—powering fast, affordable payments and DeFi applications worldwide.

Model	How It Works	Examples
Single-Asset Bridge	Uses one digital asset (like XRP or USDC) to transfer value between currencies or networks	XRP ODL, Stellar USDC corridor
Automated Market Maker	Uses liquidity pools to provide bridge assets and real-time conversion rates	Uniswap, Curve, PancakeSwap
Multi-Network Protocol	Bridges value across multiple blockchains and asset types for interoperability	Thorchain, Stargate, Multichain

How Liquidity Bridging Works

the mechanics of cross-currency settlement

Bridge Currency Flow (XRP Example)
1. Sender initiates payment in source currency (EUR)
2. Source currency converted to bridge asset (XRP)
3. Bridge asset transferred across network (3-5 seconds)
4. Bridge asset converted to destination currency (MXN)
5. Recipient receives local currency
6. Settlement complete — no pre-funded accounts needed

Key Advantage: Instead of requiring liquidity for every currency pair (190+ currencies = 18,000+ pairs), bridge assets reduce this to ~380 pairs (each currency to/from bridge).

Traditional Correspondent Banking
• 3-5 business days settlement
• Pre-funded nostro accounts
• Multiple intermediary banks
• High fees (3-7%)
• Limited currency pairs
• Time zone dependencies

Liquidity Bridging
• Seconds to minutes settlement
• On-demand liquidity
• Direct network transfer
• Low fees (<1%)
• Any currency pair via bridge
• 24/7 operation

Bridge Asset Comparison

evaluating different bridging solutions

Bridge Asset	Speed	Volatility Risk	Use Case
XRP	3-5 seconds	Low (fast settlement)	Cross-border payments (ODL)
USDC/USDT	Varies by chain	Minimal (pegged)	Stablecoin corridors
$RLUSD	Fast (XRPL/ETH)	Minimal (regulated)	Institutional bridging
$KAG/$KAU	Fast	Metal-price exposure	Value preservation bridging
BTC (Lightning)	Instant (L2)	Higher volatility	Bitcoin-native bridging
Native Chain Tokens	Varies	Higher volatility	DeFi cross-chain swaps

Liquidity Bridging Use Cases

where bridge assets solve real problems

Remittances
• Worker sends money home
• Bridge asset eliminates forex markup
• Settlement in minutes vs days
• Lower fees than Western Union
• Mobile wallet delivery
• Example: Philippines ↔ US corridor

B2B Payments
• Supplier payments across borders
• Treasury optimization
• Reduced working capital needs
• Real-time settlement
• Multiple currency management
• Example: Manufacturing supply chains

DeFi Cross-Chain
• Move assets between chains
• Access liquidity anywhere
• Arbitrage opportunities
• Yield optimization
• Portfolio rebalancing
• Example: ETH → Solana for lower fees

Forex/Treasury
• Corporate currency hedging
• On-demand liquidity access
• Reduced pre-funding needs
• 24/7 market access
• Instant settlement
• Example: Multinational treasury ops

Ripple ODL Deep Dive

XRP as the premier bridge currency

How ODL Works
• On-Demand Liquidity service
• XRP bridges source → destination
• No pre-funded accounts needed
• 3-5 second settlement
• Real-time forex rates
• Integrated with RippleNet

Why XRP as Bridge
• Purpose-built for payments
• Fast finality (3-5 seconds)
• Low transaction cost
• High throughput (1,500 TPS)
• Deep liquidity globally
• Regulatory clarity improving

Active Corridors
• US ↔ Mexico
• US ↔ Philippines
• Europe ↔ APAC
• Japan ↔ Southeast Asia
• Middle East ↔ Asia
• Expanding globally

Institutional Adoption
• MoneyGram partnership
• SBI Holdings (Japan)
• Tranglo (APAC)
• Multiple banks and FIs
• Payment processors
• Growing enterprise usage

The ODL Advantage: Traditional correspondent banking requires pre-funded nostro/vostro accounts—trillions locked up globally. ODL eliminates this by using XRP as on-demand liquidity, freeing capital while settling in seconds. This is why XRP was designed as a “bridge currency” from the start.

Liquidity Bridging Checklist

understanding cross-currency settlement

Core Understanding
☐ Know liquidity bridging basics
☐ Understand currency conversion
☐ Know cross-border use cases
☐ Understand settlement finality
☐ Know liquidity pool role
☐ Compare bridge models

Bridge Assets
☐ Know $XRP as bridge currency
☐ Understand bridge currency concept
☐ Know stablecoin corridors
☐ Understand $RLUSD institutional role
☐ Know AMM bridge mechanics
☐ Evaluate volatility risk

Technical Knowledge
☐ Understand interoperability
☐ Know token compatibility
☐ Compare to SWIFT rails
☐ Understand settlement speed
☐ Know fee structures
☐ Evaluate counterparty risk

Practical Considerations
☐ Assess volatility exposure
☐ Understand regulatory status
☐ Know corridor availability
☐ Evaluate liquidity depth
☐ Compare bridge providers
☐ Plan for edge cases

The Principle: Liquidity bridging solves one of global finance’s oldest problems—moving value across borders efficiently. Instead of maintaining expensive nostro accounts or waiting days for correspondent banking settlement, bridge assets enable instant, low-cost transfers using neutral intermediary assets. Whether XRP for payments, stablecoins for DeFi, or $KAG/$KAU for value preservation, liquidity bridging is transforming how money moves globally. The key is matching the right bridge asset to the use case—speed, stability, regulation, and liquidity depth all matter.

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