What incentives do Crypto 2.0 systems provide for IOU Gateways?

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I am wondering what inventives do various Crypto 2.0 systems provide for IOU Gateways (ones that create currencies backed by other currencies or commodities, like USD, BTC or the like)?

Just to be clear, by "Gateway" I mean a business that takes currency external of the Crypto 2.0 system, issues IOUs in the system for that currency and is responsible for converting the IOUs back to that currency. For example, Bitstamp is a Gateway for USD and BTC in Ripple. By "IOU" I mean a token in the Crypto 2.0 system that can be created easily and is not native to the system (for example, USD and BTC in Ripple are IOUs, XRP is not. BTC is not an IOU in the Bitcoin network).

ThePiachu

Posted 2014-06-25T06:15:03.600

Reputation: 41 594

Answers

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Universal

In most if not all Crypto 2.0 systems, a Gateway can:

  • Charge the users for IOU deposits
  • Charge the users for IOU withdrawals

Ripple

In Ripple, a Gateway can set a percentage fee for whenever their IOU is transferred from one user to another. Say, at 1% fee, to send someone $100, one needs to spend $101. The recipient receives $100, while the Gateway's liabilities decrease by $1, giving them that much in profit.

Ethereum

In Ethereum, a Gateway can create an arbitrary contract for how its currency will be used. This contract can include any fee for currency being transferred or exchanged, demurrage, or anything else that can be coded in a smart contract.

ThePiachu

Posted 2014-06-25T06:15:03.600

Reputation: 41 594

1It might be more appropriate to use an example of 0.2% or less since that's more in line with the typically amounts currently seen on Ripple. – dchapes – 2014-06-25T16:18:30.490

Gateways can also earn interest on the funds they hold until they are redeemed. Currently NZD/Coinex even passes some of that on to their users. – dchapes – 2014-06-25T16:19:36.280

Asked: 2014-06-25T06:15:03.600

Viewed: 456 times

Active: 2014-06-25T13:36:34.780