Funds in the Ripple Consensus Ledger tend to flow in a cycle. When the issuing address sends payments, it creates balances, called issuances, in the accounting relationships in the Ripple Consensus Ledger. Issuances have positive value from the perspective of the customers, partners, operational addresses, and standby addresses. The same issuances are negative balances from the perspective of the issuing address, since they represent obligations. When the issuing address receives a payment, this reduces its obligations, effectively "destroying" the issuances that were sent.
+Funds in the Ripple Consensus Ledger tend to flow in a cycle. When the issuing address sends payments, it creates balances in the accounting relationships in the Ripple Consensus Ledger. Within the RCL, users can exchange balances across different accounting relationships, so we use the term issuances to describe any non-XRP balance. Issuances have positive value from the perspective of the customers, partners, operational addresses, and standby addresses. The same issuances are negative balances from the perspective of the issuing address, since they represent obligations. When the issuing address receives a payment, this reduces its obligations, effectively "destroying" the issuances that were sent.
The issuing address sends issuances to a standby address, or directly to an operational address. The standby addresses send those issuances to operational addresses. Operational addresses send payments to liquidity providers or other customers and partners. Because all issuances are tied to accounting relationships with the issuing address, payments and exchanges of issuances "ripple through" the issuing address. The payment debits the sender's balance in its accounting relationship with the issuing address and credits the recipient's balance in the recipient's accounting relationship with the issuing address. The Ripple Consensus Ledger also supports more complicated paths that connect multiple issuers through order books and liquidity providers who allow their funds to ripple.
The issuing address is like a vault. Partners, customers, and operational addresses create accounting relationships (trust lines) to the issuing address, but this address sends as few transactions as possible. Periodically, a human operator creates and signs a transaction from the issuing address in order to refill the balances of a standby or operational address. Ideally, the secret key used to sign these transactions should never be accessible from any internet-connected computer.
diff --git a/content/concept-issuing-and-operational-addresses.md b/content/concept-issuing-and-operational-addresses.md index 30421da2f6..64878452e1 100644 --- a/content/concept-issuing-and-operational-addresses.md +++ b/content/concept-issuing-and-operational-addresses.md @@ -10,7 +10,7 @@ All non-XRP currency balances (issuances) in the Ripple Consensus Ledger (RCL) a [](img/funds_flow_diagram.png) -Funds in the Ripple Consensus Ledger tend to flow in a cycle. When the issuing address sends payments, it creates balances, called _issuances_, in the accounting relationships in the Ripple Consensus Ledger. Issuances have positive value from the perspective of the customers, partners, operational addresses, and standby addresses. The same issuances are negative balances from the perspective of the issuing address, since they represent obligations. When the issuing address receives a payment, this reduces its obligations, effectively "destroying" the issuances that were sent. +Funds in the Ripple Consensus Ledger tend to flow in a cycle. When the issuing address sends payments, it creates balances in the accounting relationships in the Ripple Consensus Ledger. Within the RCL, users can exchange balances across different accounting relationships, so we use the term _issuances_ to describe any non-XRP balance. Issuances have positive value from the perspective of the customers, partners, operational addresses, and standby addresses. The same issuances are negative balances from the perspective of the issuing address, since they represent obligations. When the issuing address receives a payment, this reduces its obligations, effectively "destroying" the issuances that were sent. The issuing address sends issuances to a standby address, or directly to an operational address. The standby addresses send those issuances to operational addresses. Operational addresses send payments to liquidity providers or other customers and partners. Because all issuances are tied to accounting relationships with the issuing address, payments and exchanges of issuances "ripple through" the issuing address. The payment debits the sender's balance in its accounting relationship with the issuing address and credits the recipient's balance in the recipient's accounting relationship with the issuing address. The Ripple Consensus Ledger also supports more complicated [paths](concept-paths.html) that connect multiple issuers through order books and [liquidity providers who allow their funds to ripple](https://ripple.com/knowledge_center/understanding-the-noripple-flag/). diff --git a/content/img-sources/funds_flow_diagram.odp b/content/img-sources/funds_flow_diagram.odp index 33fb51f397..0d9195466c 100644 Binary files a/content/img-sources/funds_flow_diagram.odp and b/content/img-sources/funds_flow_diagram.odp differ diff --git a/img/funds_flow_diagram.png b/img/funds_flow_diagram.png index c5e9e302b7..9c381b1547 100644 Binary files a/img/funds_flow_diagram.png and b/img/funds_flow_diagram.png differ