With the beginning of June, Ripple has released a massive 1 billion XRP tokens from its escrow account. This regular monthly release has pushed the price of XRP down by 2%, causing many to wonder if Ripple’s escrow system is hurting the token.
But an XRP community member says XRP escrow isn’t the price killer you think! It actually “starves the market”, potentially boosting value.
Let’s dive in!
What Is Ripple’s Escrow All About?
Ripple’s escrow system was first set up back in 2017. At that time, Ripple locked up 55 billion XRP to build trust and avoid flooding the market with too many tokens. Each month, they release 1 billion XRP from escrow. But here’s the twist—Ripple doesn’t spend all of it.
In fact, only about 200 to 350 million XRP are used each month to support their payment services and ecosystem projects. The rest gets locked back up in escrow, keeping the market from getting overwhelmed.
This careful system was put in place to make sure there’s enough XRP in the market to help with real payments and services, but not so much that it drives the price down.
Right now, Ripple still has about 36.5 billion XRP locked in escrow, which shows they’re serious about managing the supply.
Why Some Are Worried?
Some people, especially Bitcoin supporters, think these monthly XRP releases are like “token dumps” that push prices down. Even a few people in the XRP community share this worry. They say too much XRP could hurt the token’s price in the long run.
But Abraham Liim, an XRP community member, thinks differently. He says this system is actually “starving” the market, meaning it’s holding back most of the XRP from entering circulation.
This can help keep the price from crashing and might even lead to a future price boost if demand picks up.
Should Ripple Burn All Escrowed XRP?
Others have suggested that Ripple should just burn all the escrowed XRP to make it scarce and push up the price faster. But Ripple’s Chief Technology Officer, David Schwartz, believes that would waste valuable tokens that could be used for real projects.
Instead, he says if Ripple keeps releasing small amounts while demand grows, XRP could see a big price jump naturally.
