- Ripple routinely unlocked another 1 billion XRP from the Ripple escrow.
- The majority of released XRP is returned back to the escrow at the end of the month.
Another 1 billion XRP has been released from the Ripple Escrow as the new month begins. This release is part of a routine escrow release, ensuring transparency and predictability of the remaining XRP supply.
As explained by Ripple CTO David Schwartz, Ripple had previously locked 55 billion XRP in an escrow, which is programmed to release 1 billion every month for 55 months. The escrow system ensures greater transparency and predictability over the uncirculating supply, preventing Ripple from dumping billions and thus, crashing the price.
What is Escrow XRP Used For?
Ripple’s one billion monthly XRP allowance has raised concerns as to where the funds are being used. According to Ripple, The unlocked XRP will be used to further the Ripple ecosystem, including “incentives to market makers who offer tighter spreads for payments and selling XRP to institutional investors.”
More importantly, the majority of unlocked XRP ultimately ends up back in the escrow. While Ripple unlocks one billion XRP every month, the unused XRP is sent back to the escrow at the end of the month. For example, last month, 900 million of the 1 billion XRP tokens were sent back into escrow. Thus, the one billion XRP unlocked every month may not have a significant market impact.
Furthermore, as reported by The Crypto Associate, institutional direct XRP sales have declined by 86% in Q1 2020. Despite the decline in direct institutional XRP sales, RippleNet usage has been surging amid coronavirus as financial institutions go digital.
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