Ripple’s native currency XRP has continued to consolidate after the Court hearing on April 30, despite Ripple Labs releasing 1 billion XRP from its escrow wallet last weekend.
Ripple’s Escrow Wallet Unlock 500M XRP
According to data from Whale Alert, a service organization that tracks large cryptocurrency transactions, two batches of 500 million XRP worth $5.99 billion were unlocked from Ripple’s escrow wallet on May 1.
Although some Twitter users were immediately concerned about the impending “dump”, other users pointed out that these transactions are part of Ripple’s monthly XRP escrow release and that it will be relocked later.
How the XRP’s Escrow Works
The monthly spending of a billion XRP is nothing new. According to a 2017 Ripple blog post, Ripple has locked 55 billion XRP (55% of total potential supply) in a series of escrow accounts that publish 1 billion XRP every month. These are hosted in the general ledger itself and in the general ledger mechanism through consensus implementation to control the output of XRP.
The XRP escrow is designed to ensure the predictability of XRP supply by maintaining a cap on the amount of new XRP that can be released for dispensing. The actual amount of XRP issued is typically less than a billion XRP, and the remaining XRP per month is deposited with a new custodian.
One billion XRPs have been released every month since January 2018. According to XRParcade data, in 41 months, Ripple has issued 41 billion XRPs, of which 33.7 billion have been taken into custody, and an average of 822 million have been re-custody each month.
According to Whale Alert, 100 million XRPs were transferred to Ripple, and 900 million XRPs were taken into custody this month.
The Influence of Ripple’s Escrow Release on XRP’s Price
XRP is currently the fourth-largest cryptocurrency in the world, with a total market cap of approximately $73 billion. This is roughly 3% of the total market value of cryptocurrencies.
The price of XRP (the world’s fourth-largest cryptocurrency by market capitalization) initially fell more than 60% after the US Securities and Exchange Commission filed a lawsuit against Ripple in December 2020. The development resulted in the cancellation of XRP token listings on US cryptocurrency exchanges. Since then, XRP owners have decided to intervene as a third party accused in the SEC lawsuit against Ripple to protect their interests. The lawsuit is currently in the discovery phase, and both parties are trying to get more information from the other party and limit the information that needs to be shared.
The price of XRP rose last Friday after XRP concluded that the judge needed more time to make a decision, following a hearing about the SEC’s use of formally asking foreign regulators to obtain information about Ripple.
The XRP community and cryptocurrency industry are paying close attention to the SEC’s lawsuit against Ripple. This is because of its potential impact that could set a legal precedent for other cryptocurrencies.