Evolve Markets

Ripple’s 55 billion XRP lockup complete

Back in May 2017, Ripple committed to placing 55 billion XRP in a cryptographically-secured escrow account to create certainty of XRP supply at any given time. The team reported that this lockup is now finished.

By securing a comprehensive amount of XRP in escrow, people can now mathematically verify the maximum supply that can enter the market. This lockup kills any concern that Ripple could flood the market, which the Ripple team has pointed out before is a scenario that would be bad for them as well.

Ripple stated:

“This move underscores Ripple’s commitment to building XRP liquidity and a healthy and trusted market. Long term, the value of digital assets will be determined by their utility. XRP has emerged as the only digital asset with a clear institutional use case designed to solve a multi-trillion dollar problem – the global payment and liquidity challenge that banks, payment providers, and corporates face.”

“Real institutional customers are already using and finding value in XRP, and governments, regulators and central banks are increasingly recognizing the role it could play in the global system. While other digital assets continue to bump against their transaction limits, XRP remains the fastest, most efficient and most scalable digital asset in the world – making it the best digital asset for payments. It’s no surprise that institutions are looking to XRP to provide much-needed on-demand liquidity for cross-border payments.”

How the escrow works:

  • The Escrow feature in the XRP Ledger allows parties to secure XRP for an allotted amount of time or until specific conditions are met. For example, Escrow allows a sender of XRP to put conditions on exactly when a payment can be completed, so the payment remains cryptographically locked until the due date.
  • Ripple uses Escrow to establish 55 contracts of 1 billion XRP each that will expire on the first day of every month from months 0 to 54. As each contract expires, the XRP will become available for Ripple’s use. Users can expect Ripple to continue to use XRP for incentives to market makers who offer tighter spreads for payments and selling XRP to institutional investors.
  • Ripple will then return whatever is unused at the end of each month to the back of the escrow rotation. For example, if 500M XRP remains unspent at the end of the first month, those 500M XRP will be placed into a new escrow account set to expire in month 55. For comparison, Ripple has sold on average 300M XRP per month for the past 18 months.

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