Earlier this morning (July 3rd), Whale Alert announced that 1 billion XRP has been unlocked from Ripple’s escrow wallet.
According to Whale Alert, this 1 billion XRP was executed through 5 different transactions, all conducted at 00:00 (UTC).
While it may sound significant and alarming, in reality, the release of 1 billion XRP by Ripple is not a new or unusual event, as it typically occurs on a monthly basis. In 2017, Ripple announced its intention to place 55 billion XRP tokens into escrow using the escrow feature on the XRP Ledger.
Ripple Labs explains that the release of 1 billion XRP on a monthly basis is intended to incentivize investors and maintain interest in the cryptocurrency. The plan was initiated by Ripple in early 2018 and had two temporary pauses from October to November 2022.
It is worth noting that not all of the 1 billion XRP released remains in circulation after issuance. A significant portion of the newly minted tokens, around 600-700 million XRP, is typically returned to the Escrow wallet a few days after the release.
Escrow is a feature of the XRP Ledger that allows users to send conditional XRP payments. These conditional payments, known as escrows, set aside XRP on one side and transfer it once specific conditions are met. The conditions for successful escrow completion can include time-based unlocking… Escrows can also expire if they are not completed in a timely manner.
The XRP Ledger sets up a dedicated escrow account, which is locked. No one can utilize the XRP until the escrow process is successfully completed or canceled. Before the expiration time, only the designated recipient can receive the XRP. After the expiration time, the XRP can only be returned to the sender.