Not Sure Locking 55B XRP in Escrow Was Good Idea

David Schwartz, a Ripple top executive, has openly shared his lingering apprehension about the prudence of Ripple’s choice to lock billions of XRP in escrow.

In a recent comment on X, David Schwartz, who is CTO at Ripple, revealed his reservations about the firm locking 55 billion XRP in escrow, noting that he never considered it a good idea.

Schwartz stated he initially opposed the move back in 2017. However, he later provided only tepid support. Looking at the present, he admitted to being in a state of indecision regarding the matter. In his words:

“I’m still not sure the escrow was such a good idea. I initially opposed it. Later, I weakly supported it. And today, I’m right on the fence.”

I’m still not sure the escrow was such a good idea. I initially oposed it. Later weakly supported it. And today, I’m right on the fence.

— David “JoelKatz” Schwartz (@JoelKatz) January 8, 2024

Significantly, the context of the conversation revolved around the increasing concern within the XRP community regarding Ripple’s ongoing sale of XRP.

David Schwartz highlighted that the company is confronted with only two decisions regarding the XRP held in escrow.

The options are either to uphold the current level of the XRP portfolio or decrease the amount it holds. “There really isn’t any third option,” he remarked.

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Ripple Locking 55B XRP in Escrow

Notably, Ripple initiated the XRP escrow plan nearly seven years ago as part of its strategy to manage the supply of XRP in the market. Particularly, the firm established it to address concerns regarding the potential impact of large XRP sales.

Therefore, in May 2017, Ripple secured 55 billion XRP out of its 61.68 billion tokens using the XRP Ledger escrow service. The XRPL escrow functions as a smart contract, executing transactions when the written rules are met.

Through the escrow system, Ripple established 55 contracts, each for 1 billion XRP, to expire on the first day of every month. Upon the expiration of each contract, the corresponding XRP is made available for Ripple’s further distribution.

Meanwhile, Ripple reverts any portion of the released XRP that goes unused to the escrow queue. Emphatically, for the past six months, Ripple has consistently locked back 800 million XRP each month.

This ongoing practice has led to Ripple holding approximately 40 billion XRP in escrow. The initial estimates suggest that the monthly unlock of 1 billion XRP will conclude by 2027.

Notably, prominent figures in the XRP community, like crypto author Panos Mekra, have proposed that Ripple donate most of its XRP holdings in escrow to the XRP Ledger Foundation (XRPLF).

The view is that the XRPLF would manage the distribution of XRP tokens across diverse channels, such as community incentives, educational initiatives, and marketing endeavors related to XRPL.