Yesterday, the second-largest cryptocurrency in the world, XRP, achieved major adoption goals when it was picked by the blockchain solutions firm, r3 as the first settlement mechanism for Corda Settler. Post the news, r3 posted a YouTube video on its channel, explaining the working behind the Settler. Here, r3 also wrote:
“Corda Settler is an open-source CorDapp to help Corda users settle transactions. Corda Settler provides a bridge to any payment rail that can return a cryptographic proof of settlement. This includes any ‘traditional’ domestic and cross border payment systems able to return such a proof, as well as blockchain and cryptocurrency-based rails.”
The video began with the explanation of what the Settler does, stating that there are two legs of the transaction wherein one leg creates an obligation to complete the other leg. Furthermore, Corda Settler allows uses to complete the second leg on any system, whether it is an on-blockchain rail, a cryptocurrency system or a traditional system.
Subsequently, r3 told the users that in case of the second leg not being on Corda, it will provide two integration points – one for the users to initiate payments and the other for the confirmation of the payment status.
The explanation then took a turn to cite an example of the mentioned process. Here, it stated:
“A network of participants using Corda Settler – Company A and Company B are the counterparties. They are using a notary service on Corda and they both have access to nodes in other payment systems.”
Next, the video demonstrated the mechanism keeping XRP as the mode of payment. As per the demo, company B has an obligation to pay $100 to company A. As a beneficiary, company A can choose the currency in which it would like to receive the payment.
Here, the beneficiary chooses XRP to update the obligation wherein it will get the current exchange rate from an exchange to further update the obligation with the new currency. The beneficiary may also select details, such as the address on the XRP network to receive the payment with the amount.
Post all the required signatures, company A will distribute the obligation with company B in order for the latter to initiate the payment. The video further explained:
“Company B is now ready to settle this obligation and so initiates a transaction from their XRP node. This obligation can be settled in one or many transactions. Company B gets a payment submission confirmation from the XRP network, updates the obligation with the transaction hash and sends it to company A and the settlement.”
The last leg of the transaction is completed after the settlement queries transaction with the specified transaction ID. r3 explained that once company B’s payment has been confirmed, the settlement marks the payment as settled, obtains a notary signature and distributed the updated obligation to both the companies.
r3 also mentioned that this has shown an imperative connection between digital assets and applications on Corda and other settlement systems.
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Original Post: XRP mechanism demonstrated by r3 for its new adoption journey with Corda Settler