On August 1, a whale alert sent XRP community members on Twitter into a frenzy. The alert revealed that one billion XRP was moved from Ripple’s wallet. The reactions that follow the event are negative as most people thought the network was engaging in a token dump which is frowned upon. However, it was revealed that it was only a monthly escrow release which was set by Ripple in a bid to regulate the upper limit on new XRP in circulation.
XRP (XRP) Price Today – XRP / USD
Whale Watching Twitter User Spotted The Move on Wednesday Afternoon
The crypto Twitter community became aware of the move on Wednesday afternoon when a whale-watching Twitter account spotted it. From the account’s report of the move, the transaction was worth more than $320 million at press time. The sum came from Ripple’s wallets and was unlocked after midnight on the same date.
When the news broke, the XRP community members were not impressed by it. So many of the users on Twitter believed that Ripple was running a pump and dump scheme. Several users replied to the tweet alert and spoke about their displeasure with the network. some were outrightly amused while others were outraged. The previous accusations against Ripple may have helped push the narrative that it was engaging in nefarious activities. Ripple had been accused of dumping billions of tokens to increase profits as XRP holders suffer the losses alone.
Some users believe that such a token dump would decimate the weak XRP price. Others compared it to scenarios where central banks create inflation by simply printing more money.
Escrow Mechanism Responsible for XRP Transaction
As community members discussed the possibilities of a pump pf dump scheme by Ripple, some XRP supporters clarified the issue. One explained that such dumps happen on a monthly basis and debunked the claims that it was a pump and dump scheme.
Everyone blows up when this happens; it is a monthly escrow release. On average, 75-80% of XRP (800 Million) is returned The 80% that is returned, will be placed back into another 55 month escrow. They have a 30 year plan to distribute the supply; this is not a "Pump & Dump".#XRP
— Dakota Shipley (@DakotaDS) August 1, 2019
The escrow mechanism was put in place by Ripple and it was responsible for moving 1 billion XRP from the network’s wallets. Ripple created this escrow account to introduce predictability to the supply of XRP. It made this clear in a document published in late 2017, explaining that 55 billion XRP, about 55% of the total supply of XRP ever was locked in escrow wallets. The escrows are placed on Ripple ledger and ledger mechanics control them.
Once every month, 1 billion XRP is moved out from escrow to provide an upper limit on the number of new tokens that can be in circulation at a time. Since the wallets hold about 55 billion tokens, the process will go on for 55 months. By mid-2021, it should have been exhausted.
Ripple has also said that unused XRP is usually returned to the escrow account when the month ends. It will then be redistributed during the next release. Most of the escrow tokens are set to be sold but a particular portion of the funds will be used in the support of projects that would improve the XRP ecosystem.
This news didn’t go well with XRP price. The price pf XRP lost about 2% of its value in under 24 hours. At press time, XRP is trading at $0.316852 according to Coin Market Cap. Its market cap is $13,584,289,803 with a 24 hour volume of $843,882,751.