In an ideal ecosystem of Ripple, there will be lots of market-makers that compete intensively with each other, the spread will be minimal and the volume will be huge, thus bring down the cost of transactions and currencies-conversion.
However, this is not the case in current stage. When we look at the order books, the first impression most people get is the wide spread and low volume. How could Ripple become a low cost payment if there's no liquidity?
In normal condition, wide spread means windfall-profit opportunity. This should attract investors, speculators and arbitragers to fill up the gaps. However, currently Ripple's user base is quite small and transaction volume is very low. So even though the margin is great, the absolute figure of profit is still not attractive enough to bring in some big players.
And because ripple is still in beta, there is a high risk of total failure and everything thrown into it may become wasted. Hence most people only willing to invest little amount of money or time into it.
so these had become a cycle: not enough market-makers means wide spread and high cost, thus very few people want to use ripple, then the low transaction volume, and hence no body willing to invest significant amount of time/money for market making.
The pooled fund is intended to solve this chicken-egg problem.
In the form of pool, we could raised fund to inject bigger tranche of liquidity into market, yet each individual only assume small amount of risk, limited to the portion of money they contribute. And having a manager to perform the market-making jobs means those who have no time for this can still participate in providing liquidity.
Off course, with only one or few funds like this we are still not able to create great liquidity in the system, but at least we take our steps. I'm in a hope that there will me more funds (be it individual or pooled) joining the market-making party in the future, each will have their own trading strategy or technique, and some with automated process to do it more efficiently.
Only with the presence of intensive competition will Ripple then become a highly liquid low cost payment system and attract more users.
