As 2023 approaches its end, Ripple, the prominent cryptocurrency payment company, has been actively managing its XRP holdings, with recent moves shedding light on its spending strategy and the dynamics of its escrow system.
Ripple’s Escrow System in Focus
The Ripple escrow system, established in December 2017, releases 1 billion XRP monthly. In an effort to stabilize the XRP market, Ripple routinely re-locks 80% (800 million) of the released XRP back into escrow. The remaining 20% (200 million) is sent to Ripple’s main wallet, labeled “Ripple 1,” before being distributed to various unlabeled addresses and eventually reaching centralized exchanges for sale via blind bid/ask transactions.
December Spending: Unraveling the Transactions
In December 2023, Ripple sent 200 million XRP from the 1 billion coins unlocked, originating from its wallet labeled “Ripple 22,” to the main spending account. The spending wallet had a balance of 336,340,276 XRP as of December 1.
Ripple has spent 240 million XRP from this balance in three tranches throughout the month. On December 6, 2023, 60 million XRP was sent to an unlabeled address. Six days later, another 60 million XRP was sent to the same unlabeled address. Additionally, on December 20, 120 million XRP was sent to the same address, bringing the total spending for the month to 240 million XRP, equivalent to $148.8 million at the current price of $0.62 per coin.
Remaining Liquid XRP and Potential Impact
After these transactions, Ripple’s main spending wallet now holds a balance of 96,340,276 XRP. With the current price at $0.62 per coin, the remaining liquid XRP in the Ripple 1 address is valued at $59.73 million. Ripple has the option to sell these coins before the year-end or retain them in the wallet for future use. The sale of the remaining 96.34 million XRP is expected to have minimal impact on the market price.
Escrow Dynamics: Looking Beyond December
While Ripple has spent a portion of its liquid XRP, its escrow account still holds 40.7 billion XRP. The company will continue to unlock hundreds of millions of XRP from escrow until 2027. Originally, the plan was to release 1 billion XRP monthly for 55 months, but with re-locking hundreds of millions of XRP after each successful unlock, Ripple extended the deadline to 2027.
As 2023 concludes, Ripple’s strategic moves in handling its XRP holdings provide insights into the company’s approach to liquidity, market stability, and the long-term dynamics of its escrow system.