2023-07-04 15:07:23
2% of all XRP coins in circulation can be dumped on the market by Ripple, the issuing company behind XRP. Although it is a transparent and long-standing practice, almost half a billion dollars worth of XRP is not what any investor wants to see on the market. Of course, it doesn’t eat the porridge so hot: XRP has a well-established escrow mechanism for issuing new supply month following month. This provides transparency and predictability and allows Ripple to release XRP coins in a gradual and controlled manner. By making the supply predictable, investors can also more easily price the value of the coin, which gives relative stability to the XRP price. Although the “unlocking” of 1 billion XRP coins per month may sound alarming at first, it is important to note that these tokens will not be released to the market immediately, so a billion XRP will not suddenly appear on the seller’s side of the exchanges. Ripple markets these XRPs directly or indirectly through several channels. Investments and development incentive Ripple can use part of the released XRP to finance startups and support initiatives that bring improvements to the Ripple ecosystem. These investments can foster innovation and growth. Direct Sale to Investors Ripple may choose to sell a portion of the issued XRP to institutional or private investors. This process is usually done through various exchanges and can add strong liquidity to the XRP market. In-House Use Ripple may retain a portion of the released XRP to fund its own business needs and strategic initiatives. From this, you can start internal projects, spend it on developments, or, for example, spend it on international expansion, including marketing costs. Partnerships Like most major crypto companies, Ripple likes to constantly increase its number of partners. This often requires money, but in return new partnerships can further strengthen the stability and expansion of the ecosystem. All in all, analysts do not consider the launch of new XRPs to be that dangerous and are urging investors to remain calm. The release of XRP coins is a normal and regular process that has been going on for years. While it’s true that more intense coin release periods can potentially affect XRP’s price, it’s important to note that Ripple mitigates the impact of these releases with a number of measures. Ripple has stated that it will not sell all of the released XRP immediately, instead the company will likely sell the tokens gradually over time, which will help avoid sudden price spikes or drops.
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