Ripple's market value exceeds $14 billion, and the official promise is to lock up 55 billion tokens

Ripple, a distributed financial technology company, is about to lock up nearly $10 billion of its XRP through dozens of smart contracts. Every month, the escrow contract will release 1 billion XRP for Ripple to use.

The voluntary freezing of assets in an escrow contract is intended to allay investor concerns that Ripple is wreaking havoc on the market. At press time, Ripple holds $22.7 billion worth of XRP, which has yet to be released to the public.

Specifically, the San Francisco company has committed to locking up 88% of those funds, or roughly $20 billion worth of XRP, with a series of smart contracts set to release 1 billion XRP each month over a four-and-a-half-year lockup period.

Ripple told CoinDesk today that it hopes the freeze will bring confidence to XRP holders.

Ripple CEO Brad Garlinghouse said in an interview with reporters that it would be irrational to dump the entire market, which is against the company's interests. He added that it is time to move the remaining tokens to smart contracts and completely eliminate the trust issue.

Garlinghouse said:

“We want to make sure that the Ripple consensus ledger is the strongest possible, and that the liquidity of the XRP token is the strongest possible, and I think that’s a very positive step.”

Currently, based on the 38.3 billion XRP in circulation, its overall market value is approximately $14.3 billion. However, unlike other cryptocurrencies (including Bitcoin and Ethereum), Ripple itself holds almost twice as much (61 billion XRP) as the market circulation.

sense of security

To reassure potential XRP holders, Ripple has used its own escrow functionality to establish 55 smart contracts, each holding 10亿XRP. Every month, one of these contracts expires and releases the locked XRP.

Garlinghouse said that over the past 18 months, Ripple has spent about 300 million XRP per month to incentivize market makers to provide tighter spread payments, which Ripple calls “good stewards” of the nascent XRP economy.

For example, he said the XRP has been sold to institutional investors to help raise additional funds to pay engineers who oversee the open-source codebase (Ripple has raised $93 million in funding so far). Then, at the end of each month, unused XRP is added to the end of the escrow queue and distributed in the form of additional monthly contracts.

The company did not reveal a firm time frame for implementation, but Garlinghouse estimated the process would be completed by the end of the year. Spencer Bogart, head of research at Ripple investor Blockchain Capital, said that if the contracts can be implemented safely, they will have a positive impact on Ripple users.

“The fact is that Ripple owns a huge amount of XRP, and if these coins suddenly flood into the market, it will cause panic among investors,” he told reporters. “Proper implementation of crypto custody to limit supply can alleviate this particular fear.”

According to Bogart, Blockchain Capital does not currently hold XRP, but it does own shares in Ripple.

Ripple's Development

If calculated based on the current market price of Ripple, the total amount of 100 billion Ripple coins has a market value that even exceeds the leader of the cryptocurrency market - Bitcoin. What is the reason?

In addition to the overall cryptocurrency market explosion, the company has inked partnerships with several banks over the past few months with the goal of making cross-border payments easier.

With the help of Germany’s former defense minister (currently an advisor to Ripple), Ripple has attracted many global customers. For example, the Ripple network recently added 10 new financial partner companies and has completed pilot experiments with 47 global banks.

Finally, Garlinghouse concluded:

“I think the market is increasingly realizing that if there are banks using our products for communications and settlements, there is an opportunity for us to show them how to reduce their liquidity costs through XRP.”