 | \this report was* originally posted on Portal do Bitcoin (in Portuguese-BR). Ripple, the company responsible for the XRP cryptocurrency, unlocked one billion units in July and, of that total, kept 200 million for itself. The amount can be put into circulation at any time and this inflationary process is repeated every month, which may impact the price and investments in the asset. These XRPs held by Ripple in July amounts to around $94 million, at the time of writing, and the company has absolute freedom to use (or sell) these crypto assets as it sees fit. In the case of selling, the amount represents more than 10% of the average daily trading volume of XRP on the market, according to CoinMarketCap — which could impact its price. Analysing Binance’s order book, responsible for the highest liquidity of XRP in the market, 200 million would be enough to completely clear all buy orders on all available spot pairs this Sunday (9). This event, which can create strong selling pressure, is repeated every month and will continue like this for at least the next four years. I’ve delved into XRP’s supply inflation system to understand and explain how these monthly releases works. How XRP supply inflation worksWhen XRP was created in 2012, the currency's ledger programmed a maximum of 100 billion units. Of which 20 billion was initially distributed between its creators and the core team behind the project. 80 billion came under the control of Ripple's treasury, which promised not to use the entire available supply at once, but to spend these coins gradually. In 2017, the team decided to implement a new system, aiming to provide more predictability in increasing the circulating supply (which moves from the Treasury Accounts to the market). The escrow system was implemented. It is a type of smart contract that locks XRPs, making their use impossible, to be unlocked under some previously programmed conditions. Ripple’s condition was to unlock one billion XRP on the first day of each month of each subsequent month, for a total of 55 months — or 55 billion XRP that still remained to be put into circulation. However, even with a monthly release of a billion, not all of it was spent or sold by the company. In this way, Ripple began to lock in the remaining amount monthly, in new escrow contracts for the future. Extending the 55-month deadline for all XRPs to be released. According to Messari, the XRP circulating supply has already increased by 8% in the last 12 months. Resulting in an approximate annual inflation in this value. There are currently 52.25 billion XRP circulating in the market. Where are the 1 billion XRP unlocked in July?Following the onchain trails of Ripple's latest escrow release, I’ve found that out of the total 1 billion XRP, 800 million were rescheduled to be unlocked within ~3,5 years. 100 million adds to the previous 900 million for release on December 1, 2026; while 700 million started a new escrow that will only be unlocked on the first day of 2027. Still, Ripple kept 200 million liquid XRP for this month. In the cash flow graph, one billion XRP were unlocked (by escrow) on July 1, 2023. Split into five transactions, destined for two wallet addresses controlled by Ripple: Ripple (22) and Ripple (23). Each address received 500 million XRP. The Ripple (23) address forwarded everything to another address controlled by the company, Ripple (10), which total value was fully locked in the new escrow for January 1, 2027. The 500 million XRP received by Ripple (22) were split into two new transactions:
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