This articles covers some of the issues that come up when using Trust Lines and offers potential methods of resolution.
N.B. Issued Currencies are commonly referred to as tokens or IOU's.
Those terms may be considered interchangeable.
First let's define some terms:
Trust Lines (Issued currencies)
IOU's (read more)Issued currencies in the XRP Ledger often represent value held by [counter-parties] in the world outside the XRP Ledger. The address that issues those funds in the XRP Ledger is expected to pay the balance back, outside of the XRP Ledger, when users redeem their XRP Ledger balances by returning them to the issuer.
Since a computer program cannot force a someone to keep a promise in the outside world, trust lines represent a way of configuring how much you trust an issuer to hold on your behalf.
Since a large, reputable financial institution is more likely to be able to pay you back than, say, your broke roommate, you can set different limits on each trust line, to indicate the maximum amount you are willing to let the issuer "owe" you in the XRP Ledger.
Trust Lines (Issued currencies)
TokensWhen a token is issued on the XRP Ledger, [it is] similar to Issued currencies (above) but instead of [being tied to] an underlying asset represented on ledger, the token is only representing itself (e.g. a utility token), it's not an IOU (I owe you) but simply a Token.
Paths
In the XRP Ledger, paths define a way for issued currency payments to flow through intermediary steps on their way from sender to receiver.
Paths enable cross-currency payments by connecting sender and receiver through orders in the XRP Ledger's decentralized exchange.
Finding paths is a very challenging problem that changes slightly every few seconds as new ledgers are validated, so[the XRP ledger protocol]is not designed to find the absolute best path.
Still, [multiple] possible paths [can be found] and the cost of delivering a particular amount estimated.
Trust Lines are one type of path. They define connections between accounts and set parameters on what and how much of a particular Issued Currency (AKA Token/IOU's) the Account Holder is willing to trade.
- The destination doesn't have the trust line for that token set
- The destination doesn't have the funds to send the transaction
- TrustLine has a balance but with a LIMIT of zero.
In the first two cases, the counterparty will have to be notified so they can remediate the condition.
The zero limit case has multiple possible cause but can be remediated by users.
Tokens Obtained via Trade
Zero is the default limit when obtaining tokens through a trade on the Decentralized EXchange (DEX) built into the XRP Ledger Protocol. The DEX can't make the assumption that the Issuer is trustworthy on behalf of the Account Holder so the limit is defaulted to Zero. Setting the trustline manually with the desired limit will rectify this (without affecting the balance).
Improper Limit From Manual TrustLine Set-up
Xumm will set a reasonable limit when adding an asset from the app. Some of the XRP Utility providers (e.g. XRPL.services) also make sure the limit is not zero but others don't.
Currently, Xumm shows the trustline limit in the Events tab of an account by looking at the details of the Added a token (Trustline) transaction type.
Functionality to catch and flag problematic TrustLine conditions is in development and will be added to a future release.
The good news is transactions to set/change trustline parameters do not incur more reserve requirements beyond the initial 5 XRP Account Object reserve set by the XRP Ledger Protocol (not the app).
Simply redo the transaction while making the appropriate changes to the relevant field(s).
The only cost will be the 12 drop transaction fee.
One drop is 1/1,000,000 of an XRP so, if the XRP price was USD $1.00 a transaction costs USD $0.000012.
Another way of putting this is doing 83,333 XRP transactions costs one penny (USD $0.01).
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