XRP Deep Dive

Takeaways

  • Ripple release xrp to market from escrow account post limited impact to the market and xrp price, given 1) low net sales as % of total volumes, 2) regular and transparent sales (1b/month), 3) no more programmatic sales. However, one credit risk worthi noticing is whether Ripple executive (like Garlinghouse) would dump their xrp to the market or other extreme event crash the market sentiment.
  • ODL is creating stronger momentum which will lead to more xrp net sales tie to payment activities. Certain non-major ccy market (/exchange) will under pressure, and market maker is essential in order to provide liquidity. However, the xrp trading volume is genuinely large enough (~$450m) to accomodate ODL prefunding activities.
  • XRP may have faced unfair regulatory crackdown, however the token continued to grow despite it throughout 2021, which is exactly the trend XRP aims to follow in 2022. During the last month of 2021, most tokens suffered a short bear including XRP. However, XRP’s chart displayed a cup and handle pattern, which could initiate a bullish reversal for the Ripple coin entering the new year. Furthermore, if Ripple wins the XRP lawsuit then the coin’s price may even touch double digits. So, the community is entering 2022 with sheer hope and confidence in Ripple and XRP.

Escrow Mechanism

To provide additional predictability to the XRP supply, Ripple has locked 55 billion XRP (55% of the total possible supply) into a series of escrows. These escrows are on the ledger itself and the ledger mechanics, enforced by consensus, control the release of the XRP.

The escrow consists of independent on ledger escrows that release a total of one billion XRP each month over the next 55 months. This provides an upper limit on the amount of new XRP that can be brought into circulation. The amount of XRP actually released into circulation will likely be much less than this. Any additional XRP leftover each month will be placed into a new escrow to release in the first month in which no escrow currently releases.

Impact to Market

0.26% post little impact to the market.

Market Cap vs FDMC

Liquidity in Exchange

$450m/24hr volume is large enough, but certain non-major ccy require market maker.

Though Bitstamp (XRP/EUR) is not the top exchange, the liquidity is still pretty decent.

Reference

An Explanation of Ripple’s XRP Escrow

Q4 2019 XRP Markets Report

Q3 2021 XRP Markets Report

XRP Lawsuit: What lies ahead for XRP in 2022?

https://cryptorank.io/price/ripple/exchanges

https://www.cryptocompare.com/coins/xrp/markets/USD

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