Ripple, the company behind the XRP cryptocurrency, is set to unlock 1 billion XRP tokens from its escrow system on November 1. This is part of a monthly routine that will last until April 2027, when all 55 billion XRP tokens held by Ripple will be released.
The 1 billion XRP tokens, worth about $550 million at the current price, will be unlocked in three transactions of 100 million, 400 million, and 500 million XRP. The tokens will be transferred to two wallet addresses controlled by Ripple: “Ripple (22)” and “Ripple (23)”.
Ripple has been using its escrow system since 2017 to make the release of XRP more predictable and controlled. The system locks up XRP tokens in smart contracts that can only be accessed under certain conditions. Ripple’s condition is to release 1 billion XRP on the first day of each month for 55 months.
However, Ripple does not spend or sell all the unlocked tokens each month. Instead, it relocks the remaining tokens in new escrows for future releases. For example, in October, Ripple unlocked 1 billion XRP but relocked 800 million (80%) in escrows set to expire by March and April 2027.
Ripple also moves some of its XRP tokens to various exchanges and wallets, presumably for selling or distributing them to its partners and customers. In October, Ripple moved millions of XRP to Bitstamp, one of the largest crypto exchanges in Europe.
Bitstamp is also one of the few exchanges supporting XRP trading after the US Securities and Exchange Commission (SEC) sued Ripple for allegedly selling unregistered securities.
Ripple’s XRP Has Risen 7% Ahead of Monthly Unlocking Event
The monthly unlock of XRP tokens has been a source of controversy and speculation among the crypto community. Some critics argue that Ripple is dumping its tokens on the market and suppressing the price of XRP. Others believe that Ripple is using its tokens to fund its operations and expand its network of partners and clients.
The impact of the unlock on the price of XRP is unclear. Some analysts suggest that the unlock creates selling pressure and drives the price down. Others point out that the market already prices in the unlock and has no significant effect. XRP has been performing well recently, surging by 7% this week and reaching a three-month high of $0.60, as per data from CoinMarketCap.
XRP is currently the sixth-largest cryptocurrency by market capitalization, with a value of over $25 billion. It has a loyal fan base that supports its vision of creating a global payment network that is faster, cheaper, and more inclusive than traditional systems.
However, it also faces legal challenges from the SEC and regulatory uncertainty in many jurisdictions. The next unlock of 1 billion XRP will happen on December 1. It remains to be seen how Ripple will use its tokens and how the market will react to them.