IMPORTANT POINTS:
- Ripple will unlock 1 billion XRP on January 1, impacting the supply and value of the token.
- Unlocking represents a significant percentage of the supply circulating and controlled by Ripple.
- Ripple has re-locked previously released tokens, extending the deadline for full circulation of XRP.
On the first day of every month, Ripple releases 1 billion XRP tokens from an escrow system on the XRP Ledger. On January 1 (Monday), the company will unlock $620 million worth of tokens in three transactions of 100 million, 400 million, and 500 million XRP.
Interestingly, the January 2024 unlock constitutes 1.84% of the current circulating supply of 53.56 billion and 2.17% of the remaining 45.87 billion XRP tokens under Ripple’s control. The latter are still locked in escrow deposits that will be released monthly until May 2027.
Three escrows will reach their finality in the final minutes of 2023, held by two well-known crypto wallet addresses owned by Ripple. Notably, ‘Ripple (22)’ will unlock 500 million XRP, previously locked in November 2019.
Furthermore, ‘Ripple (23)’ will unlock 100 million and 400 million tokens, locked in December and November 2019, respectively. These two addresses still hold 2 billion XRP tokens for monthly escrow which will be unlocked over the next two months until March 1, 2024.
Ripple Stock with 1 Billion XRP from December
1 billion XRP tokens were unlocked, as expected, on December 1st. Ripple immediately relocked 800 million (80%) of the total in escrows scheduled to end in April and May 2027.
It is notable that despite holding only 200 million XRP, the company spent 310 million tokens ($192 million) from its main address, ‘Ripple 1’, in December. Sales were made weekly in four transactions, all sent to the same address, ‘rP4X2…Kxv3’:
As it developed, the company sent the 200 million XRP to its reserves on December 1. Additionally, the payment protocol made two transactions of 60 million tokens each on December 6 and 12 and a payment of 120 million XRP on December 20. Finally, a transaction of 70 million on December 27.
Operation of the escrow system for unlocking
Ripple created XRP in 2012, with a total supply limited to 100 billion XRP . The company distributed 20 billion XRP to the creators and core team.
The treasury controlled the remaining 80 billion XRP and promised to gradually release these coins rather than all at once. In 2017, Ripple implemented a new system to make the release of XRP more predictable and controlled.
This system uses escrow, a smart contract that locks XRP, making them impossible to use unless certain conditions are met. Ripple’s condition was to release 1 billion XRP on the first day of every month for 55 months , for a total of 55 billion XRP.
However, despite releasing 1 billion XRP monthly, Ripple only spent or sold a few of them. Instead, Ripple is reportedly locking the remaining monthly tokens in new escrows for future releases. Recurring re-locks extended the 55-month deadline for all XRP to begin circulating.
These sales constitute the inflation of XRP supply as unlocked tokens begin to circulate each month. Essentially, Ripple can directly affect the economic dynamics of its token and its future price and value.
