It would appear there may be some truth to the rumors regarding a XRP supply lockup. As outlined by Ripple employee Joel Katz a few weeks ago, the discussion about locking up a substantial amount of coins has been going on for quite some time now. At first, it was assumed such a drastic measure wouldn’t matter, but it seems the team has come around to go ahead with this plan in the end.
XRP Supply Lock-up: What We Know So Far
The fine intricacies of the proposed XRP supply lockup remain mostly unknown for the time being. We do know there have been some internal discussions regarding locking up some part of the XRP supply. It is unclear if this means the Ripple founders will not sell their coins any time soon, although that appears to be the most plausible course of action right now. The founders control roughly 40% of all XRP in circulation, thus this move would be quite significant.
There have been some concerns regarding this course of action, though. The goal is to provide more predictability and avoid unnecessary volatility when it comes to the XRP in circulation and speculation across cryptocurrency markets. However, the decision has to be weighed carefully, as locking up too little or too much XRP could have consequences. Locking up a sizeable amount address availability questions, and will put some investors’ minds at ease as well.
It is unclear if any additional XRP may be locked up, though. Joel Katz hinted at how “looking up as much as we think we can for as long as we think we can” is the long-term goal. One has to keep in mind the Ripple founders may find themselves in a position where selling a small amount of the supply is required. However, there may also be a time when the founders may want to buy additional XRP to take it off the market. These are all decisions that need to be weighed carefully to avoid any conflicts or uncertainty.
Joel Katz also mentions how there is one big downside to locking up too much XRP is prices were too high. In the worst case scenario, this would not allow the team to increase the supply, should that ever be needed. Although that is somewhat of a luxury problem to have, it is also something that needs to be taken into account. Increasing the supply can still be done at a predictable rate, though.
In the end, it is important to keep in mind the Ripple founders are not looking to make money by selling XRP at temporary peaks. Some conspiracy theorists claim that has been their goal all along, even though it never has been. Locking up a portion of the supply is a viable strategy. It will be interesting to see how the team moves ahead in this regard.
JP is a freelance copywriter and SEO writer who is passionate about various topics. The majority of his work focuses on Bitcoin, blockchain, and financial technology. He is contributing to major news sites all over the world, including NewsBTC, The Merkle, Samsung Insights, and TransferGo.