On January 1, 2025, Ripple will unlock over 2 billion dollars worth of XRP from the escrow system on the XRP Ledger blockchain. These tokens will be released to the market in three transactions of 200 million, 300 million, and 500 million XRP.
The clock for the three escrows will tick in the first minutes of 2025, releasing 1 billion XRP tokens in addition to the 57.2 billion tokens currently in circulation. The release in January accounts for 2.63% of the total 38 billion XRP still locked in Ripple's escrow accounts.
Specifically, the Ripple address (24) will unlock 200 million and 300 million XRP that have been locked in the escrow account on December 1, 2024, and January 1, 2021. Subsequently, Ripple (25) will release 500 million XRP that have been locked on January 1, 2021. These will be the final transactions from Ripple (24) and (25), although there are many escrow accounts held by other addresses controlled by Ripple.
Unlike Bitcoin and Ethereum, which create new tokens 'on the go' as rewards for miners/validators keeping the blockchain secure, Ripple mined the entire supply of 100 billion XRP beforehand when the network was first launched. In 2017, 55 billion XRP were locked in a hard-coded escrow system to release 1 billion XRP per month to ensure a gradual and controlled distribution.
The scheduled unlocking helps Ripple fund its operations, invest in ecosystem development, and provide liquidity for its payment solutions. Although the actual amount of XRP that enters circulation each month is often below 1 billion due to the company locking a portion of the tokens into a new escrow, this still creates a significant selling pressure.
With Ripple currently trading above the coveted $2 mark, it remains an unanswered question whether XRP will see a proportional increase in demand to maintain its current price. However, the promise of an upcoming altcoin season creates room for cautious optimism.
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