What is the incentive for running a connector?

#1

What is the incentive for running a connector? What does a developer get out of setting up and running a connector?

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#2

Money. :slightly_smiling_face: And being a super important part of the Interledger ecosystem.

Connectors can make money from a variety of business models:

  • Spreads - the most straightforward business model is to charge a spread or percentage fee on all packets forwarded
  • Flat Fee Per Packet - a similarly simple model is to charge a flat fee per packet forwarded
  • Payment Bandwidth - Interledger introduced the concept of “payment bandwidth”, which is how much a user can send in given period of time (for example, $ / second). Connectors can charge a subscription fee for access to higher bandwidth tiers, which equate to access to more of the connector’s liquidity
  • Value-Added Services - connectors could operate at cost or at a loss and generate revenue from add-ons ranging from credit and loans, to fees for data APIs and analysis products, to Internet bandwidth

The vision of the Interledger project is to enable the “Internet of Value”, the implication being a single global payment network that processes all or nearly all of the world’s payments. As I’ve sometimes joked: all the money. Connectors that are early to the network get a head start in that race.

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#3

emschwartz

First of all let me thank you and all the other dedicated Interledger contibututers/developers for your/their relentless pursuit to create this amazing ecosystem. THANK YOU ALL!

I am very much interested in helping the Interledger ecosystem. I am not a coder/programmer (wish I was) but di have a pretty decent FIOS Gig connection to run a connector. Can you please steer me in the right direction so I may learn how I may contribute.

Thank you

#4

Has anyone drafted a legal opinion on what the regulatory requirements are of a business operating a connector?

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#5

Hi emschwartz I read about and I would like to know some things about to be a connector.

It’s interesting to understand how a connector it’s seen by the law. Anyway.

First of all:

  1. If I have a connector only work with plugin xrp. So xrp trhough xrp. I don’t have to do anything I guess.
  2. If my connector has some IOUs I read that my balance could be negative too.
  3. If I would like to be a connector Fiat - Crypto with some plugins like xrp, btc, ltc I have to do a lot of work.

So… I cannot understand which is the best benefit. I mean this work (to set up a connector, all works around to be) does it good like a second salary or I have to hard setting up?
How many time I have to update and manage the connector?

Thanks a lot for ur attention. :slight_smile:

#6

I would also like to know this. It seems to me that connectors are necessarily money service businesses, but AML requirements would make running a connector almost impossible.

The obvious option (to me at least) is to have connectors run as decentralised contracts on codius or similar where no one party runs the contract, and all parties who use it pay for it as they use it, and it in turn pays for its own resource usage.

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#8

Also curious to know about this if anyone has looked into it. Assuming money transmitting license if the transactions passing through are in USD.

Gotta crunch some numbers to calculate infrastructure cost vs. profit margin. Must take into consideration how many other connectors are up/down stream of my connector and what are their fees… Eventually that will kinda set the equilibrium of transaction fees across connectors. I wonder what will end up more profitable, connectors or bitcoin nodes…

#9

Yes, We have in Europe with the CSSF and in Canada with FinTrac. Working through it with the FinCen for the Americans as we speak. We have been running a connector and have approved accounting microservice.

You can see some of our deliveries on the RCL, however we are running it between our own wallet infrastructure and ledger. They are true interledger transactions !

#10

If you’re running a connector right now I wouldn’t worry about AML laws, regulators have much bigger things to worry about.

It is interesting to think about how KYC/AML will play out in crypto at scale though. Regulators ideally want to be able to see all transactions to be able to control citizens track down crime, but in crypto many are building for complete privacy.

@stevenrogalsky If you can share, what were the regulators’ reactions to interledger?

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