- Ripple has caused a stir among investors and critics with its latest monthly XRP release.
- The San Francisco-based blockchain company has unlocked one billion XRP from its escrow account.
- Ripple remains confident that its escrow strategy has been necessary to protect the stability of the token.
On May 1, San Francisco’s blockchain company Ripple unlocked one billion XRP from its escrow account. This release, valued at $469.6 million, is part of Ripple’s monthly distribution strategy for XRP, which began in December 2017.
Ripple has been releasing XRP from its escrow account in a controlled manner to ensure supply predictability and stability for the XRP token.
Ripple’s Latest XRP Unlock Raises Centralization Concerns
The latest release is part of a series of monthly XRP unlocks to support the growing cryptocurrency ecosystem and meet increasing demand.
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If any XRP remains unused, it is typically returned to escrow, extending the release schedule. However, critics argue that Ripple’s control over most XRP tokens in escrow raises centralization concerns.
The critics contend that such control by a single entity is against the decentralized principles of many cryptocurrencies, including Bitcoin. Investors also worry that Ripple’s ability to release large amounts of XRP each month could manipulate the token’s price.
XRP Trading at $0.46 as Escrow Strategy Protects Stability
Despite these concerns, Ripple maintains that its escrow strategy is intended to protect the stability of the token. The recent one billion XRP unlock follows a strong performance by Ripple in Q1 2023.
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The company reported a surge in XRP sales, with total sales reaching $361.06 million, a significant increase compared to $226.31 million in Q4 2022.
The XRP Ledger’s on-chain activity also performed well, with volumes on decentralized and centralized exchanges experiencing significant growth. According to CoinGecko data, XRP trades at $0.46 on major spot exchanges.
On the Flipside
- The company’s control over most XRP tokens held in escrow goes against the decentralized principles of many cryptocurrencies.
- Ripple’s ability to release large amounts of XRP into the market each month could be used to manipulate the token’s price.
- Ripple’s monthly XRP distribution strategy could lead to an oversupply of the token, potentially causing its value to decrease over time.
Why You Should Care
Ripple’s release of 1 billion XRP from its escrow account is significant for the broader cryptocurrency market. As one of the top 10 cryptocurrencies by market capitalization, any movements of XRP can impact the market’s overall sentiment.
FAQs
Ripple releases XRP on a frequent basis. Roughly one billion tokens are sent out from Ripple’s escrow account every month.
When you create an XRP wallet, you need to set aside a small amount of XRP as a reserve to activate your account. To get your XRP reserve back, you must close your XRP wallet and remove any remaining XRP from it.
According to data from XRPScan, as of May 1, 2023, there are over 16.5 million unique XRP addresses. It’s important to note that some individuals may hold XRP in multiple addresses, so this number is likely higher than the actual number of XRP holders.
Ripple uses neither Proof of Stake (PoS) nor Proof of Work (PoW). Instead, it uses a unique consensus algorithm called the Ripple Protocol Consensus Algorithm (RPCA).
To learn more about the debate surrounding centralization in cryptocurrencies, read here:
BTC, XRP Centralized? Justin Bons Debates True Nature of DeFi
For the latest news on Ripple and their CEO’s criticism of US crypto regulations, read here:
Brad Garlinghouse: ‘Ripple Is Focused on Positive Developments’ – Regulatory Clarity Needed in US
