Jump to content

Price effects of monthly releases of XRP from escrow


 Share

Recommended Posts

Hi all,

I have been following XRP and Ripple for a while now but I have just officially joined this forum. I have learned a great deal from you guys, so thank you!

Maybe this is a dumb question, but when Ripple says it will release 1 billion XRP "each month," is there a fixed timeline? Ripple's website doesn't seem to be clear on that (or I've been unable to find a published timeline, i.e., the exact dates), although they do have a graph describing their expected circulation: https://cdn.ripple.com/wp-content/uploads/2017/05/Screen-Shot-2017-05-16-at-9.39.37-AM.png.

Assuming the exact dates are set (and are public), or alternatively assuming that at least the date range is known / can be anticipated and that the marketplace trusts Ripple to follow through on its promise (since Ripple said that the releases will be in monthly intervals), these are my questions:

(1) Will that 1 billion XRP each month be released on the exchanges or to institutional buyers? If so, has Ripple said anything more specific about the exact plan?

(2) Ripple has the ability to set the price for that 1 billion XRP each month, right? Has Ripple indicated that it will sell that released XRP at the market price?

(3) This question has to do with standard economic theory versus the reality of the XRP marketplace. I assume at least a half of the marketplace comprises investors who've done their due diligence (i.e. those who know about the escrow and can predict the quantity of XRP with reasonable accuracy, among other things), but correct me if this is a bad assumption.
(3a)
Standard economic theory would predict a fall in price as supply increases. But of course, the case of XRP is different. There's actually a fixed supply of a 100 billion XRP. It's just that the quantity supplied comes in chunks, but we also have reasonable knowledge of this and its timeline. But of course, new buyers also arrive each month, and people who want to space out their buys will compete with the new buyers. Optimistic buyers will not space out their buys, because they want to get it as cheap as possible. Risk-averse buyers will not pay attention to the quantity locked up in escrow; their price will be based on the quantity they demand on a monthly basis. So, here's a question: Is the current price (or at least the non-speculative part) of XRP based (mostly) on the current quantity (the quantity not in escrow) or based on the total supply?
(3b)
Of course, the price depends on the proportions of the different types of buyers in the marketplace: (a) optimistic buyers who want to buy as much as they can right now, (b) buyers who know their ideal quantity demanded and are trying to space out their buys, and (c) risk-averse buyers whose prices/demand is only based on current supply not locked up in escrow. What do you believe is the proportion of each of the types of buyers currently?

(4) There may be a lot of price volatility around the date of the release each billion XRP from escrow, at least for the first few monthly releases. If Ripple plans to sell the released XRP at the market price, how will it (or can/should it) deal with the volatility in setting the price? Will all the 1 billion XRP be released at once? Or gradually over the month?

Thank you! I look forward to an insightful discussion! 

 

Link to comment
Share on other sites

The escrow contracts are all on the ledger so you could check the dates there. I don’t think it will mean much though to be honest. All the happens is when each escrow contract expires, the XRP are returned to Ripple, inc. to use. They don’t immediately come into the market. Ripple have said that any funds unused will be put back into another escrow contract to expire after the last current one. 

From what I recall, 1B / month is way more than they are currently distributing. 

-Matt

Link to comment
Share on other sites

The 1 billion is not released to the market. It is for Ripple to use if they wish to. What would you do with investment funds if you were Ripple? Probably none of the actions that result in the negative outcomes you identified in your post.

One thing being considered is acquisitions. To date funds have been used to incentivise partners. Hence the resources held by Ripple in escrow are often described as a (very powerfull) war chest.

John

Edited by jpgt1
Also note every quarter Ripple publish an Xrp Market report. So we get great visibility of Ripple and market Xrp activity as seen by Ripple.
Link to comment
Share on other sites

Just thinking about it (and slightly unrelated) - If Ripple only manage to sell 1% of the XRP that is released each month, at current prices that is a casual £10million. Over a year that's £120m.

And that's assuming the prices stay around current levels, and that demand doesn't increase..

That warchest is going to be getting bigger..

Link to comment
Share on other sites

Ripple said they will continue to use XRP for incentives for market makers who offer tighter spreads for payments and for selling XRP to institutional investors. Read more here - https://ripple.com/insights/ripple-to-place-55-billion-xrp-in-escrow-to-ensure-certainty-into-total-xrp-supply/

Ripple has sold an average of 300M a month for the last 18 months, so like @hammertoe said, any leftover XRP each month will go into a new escrow account. Ripple has been very transparent about how much XRP they programmatically sell and how they employ third parties to execute their sales, so I wouldn't worry about volatility due to that.

Link to comment
Share on other sites

3 hours ago, xrpmoonboiz said:

Ripple said they will continue to use XRP for incentives for market makers who offer tighter spreads for payments and for selling XRP to institutional investors. Read more here - https://ripple.com/insights/ripple-to-place-55-billion-xrp-in-escrow-to-ensure-certainty-into-total-xrp-supply/

Ripple has sold an average of 300M a month for the last 18 months, so like @hammertoe said, any leftover XRP each month will go into a new escrow account. Ripple has been very transparent about how much XRP they programmatically sell and how they employ third parties to execute their sales, so I wouldn't worry about volatility due to that.

So, in your opinion, is the current market price reflecting the price of the current quantity of XRP on the market (excluding the XRP held by Ripple), or the total quantity? Do you believe the current pricing assumes new/regular supply of 300M every month? Also, just to play the devil's advocate here, I am trying to comprehend the monopoly power Ripple has over XRP. I know Ripple can use its XRP reserves to create new partnerships and hence increase XRP's value. So Ripple seems to be a benevolent monopoly. However, XRP feels more like digital shares right now than fully decentralized cryptocurrency. Again, I know that some of XRP's value comes from its model that is very different from more decentralized cryptocurrencies like Bitcoin and Ethereum. But just to play the devil's advocate, I feel like Ripple has too much monopoly power. I would understand if it held 50%, but releasing only a tiny fraction to the market feels like it wants the market to have very little power. Perhaps the benefit of Ripple holding onto its XRP and increasing its value (by forming partnerships) outweighs the cost of not giving the market enough power to price XRP freely, at least in this initial stage. But I guess I don't fully understand this aspect of XRP and Ripple. Is there a good argument to go very long on XRP without having to assume that Ripple is a benevolent monopoly? I'd appreciate your thoughts. Thanks.

Link to comment
Share on other sites

1 minute ago, zenkert said:

:crigon_04:@rippleuser
Do some reading . . .  study and do not expect that the answers that you are looking for will be served on a Silver Tray by the users in this excellent Forum.

There are no short cuts to knowledge.

They take the time to make a large subtle FUD post but can't do a simple search for the info they want.  This has been rehashed a hundred times already.

Link to comment
Share on other sites

3 minutes ago, 1todd960 said:

They take the time to make a large subtle FUD post but can't do a simple search for the info they want.  This has been rehashed a hundred times already.

Hmmmm, now thats not realy fair to be honest. The questions are legit. I’ve been on the forum now for a few weeks and still have the same questions. So, in stead of saying its FUD Posts (which I think it is not, people want to learn, the only wat is by asking and make mistakes) maybe take the same time and pinpoint us in the right direction.

believe me, I want to go to the moon

Link to comment
Share on other sites

56 minutes ago, rippleuser said:

So, in your opinion, is the current market price reflecting the price of the current quantity of XRP on the market (excluding the XRP held by Ripple), or the total quantity? Do you believe the current pricing assumes new/regular supply of 300M every month? Also, just to play the devil's advocate here, I am trying to comprehend the monopoly power Ripple has over XRP. I know Ripple can use its XRP reserves to create new partnerships and hence increase XRP's value. So Ripple seems to be a benevolent monopoly. However, XRP feels more like digital shares right now than fully decentralized cryptocurrency. Again, I know that some of XRP's value comes from its model that is very different from more decentralized cryptocurrencies like Bitcoin and Ethereum. But just to play the devil's advocate, I feel like Ripple has too much monopoly power. I would understand if it held 50%, but releasing only a tiny fraction to the market feels like it wants the market to have very little power. Perhaps the benefit of Ripple holding onto its XRP and increasing its value (by forming partnerships) outweighs the cost of not giving the market enough power to price XRP freely, at least in this initial stage. But I guess I don't fully understand this aspect of XRP and Ripple. Is there a good argument to go very long on XRP without having to assume that Ripple is a benevolent monopoly? I'd appreciate your thoughts. Thanks.

You realize that about 1000 people control 40% of the BTC right? Another (up to) 20% is just lost, so effectively 60% of the BTC market. Thats actually almost exactly in line with Ripples XRP Holdings. Benevolent Monopoly? More like trusting people to act in thier own best interests.
Now as to how much out of escrow they sell, thats their holdings and their business, but Im hoping the increase in XRP will encourage them to sell less to the open market. The coins sold OUT of escrow to Fis/Banks normally come at a price break/savings but also come with restrictions to incentivize the purchase of XRP from the open markets. Any coins not sold out of that months 1B then go back into escrow at the end of the last escrow ('The first month for which there is no escrow' is how Schwartz phrased it....like you would expect a coder to phrase it) and then next months is opened...lather rise repeat for 55 months with new escrows being added to the end with unspent coins.

The power of the market is in its liquidity. The market has plenty of 'power' as it is to help XRP succeed or fail based on the market's assesment of XRPs performance. If they like XRP, the price will go up AND the volume will go up (high liquidity), if not, the opposite will happen and all the XRP that we ALL hold will be worthless (Ripples Included).

I honestly dont know why I wrote this. I give this speech three times a day on Discord.....sigh.....

Edited by Nymdok
Link to comment
Share on other sites

6 minutes ago, Tonnie said:

Hmmmm, now thats not realy fair to be honest. The questions are legit. I’ve been on the forum now for a few weeks and still have the same questions. So, in stead of saying its FUD Posts (which I think it is not, people want to learn, the only wat is by asking and make mistakes) maybe take the same time and pinpoint us in the right direction.

believe me, I want to go to the moon

Fair enough.   But there are 62 pages of posts talking about escrow.   

Link to comment
Share on other sites

18 minutes ago, Tonnie said:

Hmmmm, now thats not realy fair to be honest. The questions are legit. I’ve been on the forum now for a few weeks and still have the same questions.

Maybe I over reacted. But newbies who posts a post like this, one cannot help to react. Beacuse, ahh never mind.
This thread is just a kind of Copy of other ones similar to this one.
And more will Come.
LOTS OF WORDS. QUESTIONS AND DOUBT.

So as I said in the beginning. Read, educate and then come back with more relevant questions and Posts.
I rest my case here in this Post.
Good bye!
A good buy is XRP!

FOMO :heart::D:bad: anoyone? Notice the colors - Reggae - :beach:

Edited by zenkert
Link to comment
Share on other sites

37 minutes ago, rippleuser said:

So, in your opinion, is the current market price reflecting the price of the current quantity of XRP on the market (excluding the XRP held by Ripple), or the total quantity? Do you believe the current pricing assumes new/regular supply of 300M every month? Also, just to play the devil's advocate here, I am trying to comprehend the monopoly power Ripple has over XRP. I know Ripple can use its XRP reserves to create new partnerships and hence increase XRP's value. So Ripple seems to be a benevolent monopoly. However, XRP feels more like digital shares right now than fully decentralized cryptocurrency. Again, I know that some of XRP's value comes from its model that is very different from more decentralized cryptocurrencies like Bitcoin and Ethereum. But just to play the devil's advocate, I feel like Ripple has too much monopoly power. I would understand if it held 50%, but releasing only a tiny fraction to the market feels like it wants the market to have very little power. Perhaps the benefit of Ripple holding onto its XRP and increasing its value (by forming partnerships) outweighs the cost of not giving the market enough power to price XRP freely, at least in this initial stage. But I guess I don't fully understand this aspect of XRP and Ripple. Is there a good argument to go very long on XRP without having to assume that Ripple is a benevolent monopoly? I'd appreciate your thoughts. Thanks.

Ripple holding and selling its XRP is its revenue model and allows them to fund their business. I think what Ripple did with the escrow accounts was genius - they just allowed everyone to know the supply of XRP on the markets. I think the price of XRP will continue to rise throughout 2018 and beyond. Ripple is very strategic - rolling out xCurrent to banks/FI's/companies allows them to see how effective xCurrent it, and the next step is for those companies to (hopefully) adopt XRP. In the meantime, Ripple just locked away half of the supply, knowing that if/when these companies more to adopt XRP, demand will be much higher, therefore driving XRP prices up. Prices go up, Ripple has to sell less XRP every month to fund their business, meaning the escrow accounts would stay in place for awhile, and that also keeps the supply of XRP well known to the markets.

Hopefully that made sense, I'm a little drunk getting excited for Santa. Now I'm off to celebrate Christmas - Merry Christmas everyone!!

Link to comment
Share on other sites

If you arent subtly trying to push FUD about Ripple controlling the market then can I say you've probably spent longer writing the post than it would have taken to read the information on here and on Ripples site.  

Ripple will act sanely as it has in the past and that will be to the advantage of XRP holders.

The current price is 90% speculative but speculative for good reason...   the price will almost certainly rise, and rise significantly.  There may be various consolidations but it is clear the trend will be upwards.  

The escrow was significant because it gives cryptographic certainty to the supply side...   but in reality nothing will change in Ripples behaviour with respect to XRP distribution apart from their increasing focus on building liquidity (read price).  

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.