ODL stands for On-Demand Liquidity, a service from Ripple that uses XRP to facilitate international money transfers faster and cheaper compared to traditional methods.
How does ODL work?
In the traditional system, when transferring money from one country to another, banks need to open accounts in different currencies in other countries (known as 'correspondent accounts'), which is costly and time-consuming.
With ODL:
1. The bank or remittance company sends its local currency (e.g., Saudi Riyal).
2. This currency is instantly converted to XRP.
3. XRP is sent across the Ripple network to the receiving party within seconds.
4. XRP is instantly converted to the local currency in the recipient's country (e.g., Philippine Peso).
5. The amount is delivered to the recipient in their currency.
Advantages:
• High speed (seconds instead of days).
• Low cost (no need for many intermediaries).
• No need for huge cash reserves in external accounts.
Who uses ODL?
Currently used by money transfer companies and some banks, especially in countries with high outbound remittances like the Philippines, Mexico, Australia, and East Asian countries.
