Ripple publishes the quarterly XRP market report to voluntarily provide transparency and regular updates on the company’s views on the state of the XRP market, including quarterly programmatic and institutional sales updates, relevant XRP-related announcements such as Xpring and RippleNet partnerships, and comments on the previous quarter Market developments. As an XRP owner, Ripple believes that proactive communication is part of being a responsible stakeholder. Additionally, Ripple urges others in the industry to follow suit to build trust, encourage open communication, and raise the bar across the industry.
The decentralized XRP ledger is home to XRP, a digital asset for payments. In June 2012, 100 billion XRP units were created on the condition that XRP will never be created again. Later that year in September 2012, Ripple was formed and received a portion of that XRP. Ripple did not create an XRP. The available XRP offering diminishes over time as partial amounts are burned and destroyed to pay the transaction costs.
Since the creation of the XRP ledger, the number of closed ledgers has exceeded 51 million (as of December 31, 2019), with over 150 known validators participating in the network. The variety of these validator nodes also guarantees fairness and neutrality in the XRP ledger. No single entity can decide which transactions will succeed or fail, and no single entity can modify a transaction after it has been added to the ledger. As a result, no transaction submitted to the XRP ledger has ever been discriminated or censored – unlike some proof-of-work systems where small groups of miners could control over 51% of the hashing power and potentially reverse transactions.
Disciplined, responsible stakeholders: Continuing the break in XRP sales
As readers may recall, in Q2 2019 Ripple switched to a more conservative volume benchmark for XRP sales, away from CoinMarketCap and CryptoCompare Top Tier (CCTT), and reduced XRP sales significantly. In the third quarter of 2019, Ripple further reduced XRP sales and paused programmatic sales. Ripple kept this approach throughout the fourth quarter. However, maintaining publicly available sources of trustworthy trading volume remains an ongoing challenge. There is still a lot of progress to be made and Ripple will continue to evaluate its benchmarks and proactively work with industry participants to fix the persistence of fake volumes in the industry volume data.
For the most recent quarter, total XRP revenue was $ 13.08 million, compared to $ 66.24 million in the previous quarter. Additionally, Ripple continued the pause in programmatic sales and focused solely on our over-the-counter (OTC) sales with a few strategic partners building XRP value and liquidity in strategic regions like EMEA and Asia. Total sales (Only OTC with programmatic pause) ended the quarter with 8 basis points CCTT – this is compared to the total revenue in the previous quarter (OTC + programmatic) of 36 basis points CCTT, which corresponds to a decrease in QoQ of 78%.
|Sales overview (Dollars to millions)||Q3 2019||Q4 2019|
|Institutional direct sales (OTC)||50.12||08/13|
|Global XRP volume||Q3 2019||Q4 2019|
|ADV XRP (Dollars to millions)||198.10||187.34|
|Total XRP volume (Billion dollars)||18.23||17.24|
|Total sales in% of the total volume||0.4%||0.08% *|
* Percentage is calculated by dividing actual Ripple Dollar Revenue by the total reported XRP Volume in Dollars.
Note: In Q4, CCTT changed the method used to determine which exchanges are listed in the TopTier. This is reflected in the numbers above. Ripple continues to evaluate its benchmarks in the face of challenges such as false volume that persist in the industry.
The daily volume reported by CCTT for XRP decreased in the fourth quarter compared to the third quarter of 2019. Average daily volume for the fourth quarter was $ 187.34 million compared to $ 198.10 million in the third quarter and below the average daily volume reported for the second quarter of $ 429.51.
Based on the closing price of CCTT for XRP, the volatility of XRP’s daily returns was 3.1% from the fourth quarter, a decrease in volatility from 3.6% in the third quarter. XRP’s volatility for the quarter was similar to that of BTC (3.0%) and ETH (3.1%).
In the fourth quarter of 2019, another three billion XRPs were released from the escrow account (one billion per month). Notably, Ripple returned a full billion in escrow accounts for the first time in December of that quarter. In total, 2.7 billion XRP were returned in the quarter and then incorporated into new trust agreements. Note: All numbers are based on transactions that occurred during the quarter.
History of Escrow
Last quarter there was an increase in public comments in Ripple regarding the release of XRP from escrow at the end of each month. To provide context and remove any misinformation, as of December 31, 2019, Ripple has locked XRP 49.9 billion in a number of escrow accounts (excluding that amount, Ripple holds approximately 13% of the outstanding XRP), and those escrow accounts are in the XRP- Ledger. The ledger mechanics enforced by consensus controls the release of the XRP.
Every month the escrow releases a total of one billion XRPs to Ripple. The remaining monthly portion of the XRP will be placed in a new deed of transfer that will be released in the following months. You can find more information about Ripple’s escrow account here.
On-Demand Liquidity (ODL)
In November 2019, Ripple announced that over two dozen companies had become customers of ODL, including MoneyGram, goLance, Viamericas, FlashFX and Interbank Peru. In addition to the USD-MXN and USD-PHP ODL corridors, the company went into production with ODL payments from Australia in USD and PHP and a new ODL production corridor from EUR-USD. Plans for additional corridors in APAC, EMEA and LATAM are in the works for 2020.
In 2019, the dollar value processed through ODL rose more than a hundredfold by 550% between Q1 and Q4 and in particular from Q3 to Q4. The number of ODL transactions also increased by 290% from Q3 to Q4. This shows the high customer demand for the use of digital assets, especially XRP, for cross-border transactions.
In addition, Ripple invested in Bitso, the largest exchange in Mexico, to support RippleNet’s US MXN corridor by providing critical liquidity for payments. Last year, Ripple launched ODL features with MoneyGram in Mexico, with Bitso being the main exchange partner. MoneyGram has publicly reported that more than 10% of its transaction volume between the US and Mexico was processed through ODL.
Xpring, the open platform for money, continued to make it easier for developers to build on the XRP ledger and leverage the Interledger Protocol (ILP) to deliver the Internet of Value through tools, services, and programs. Last quarter, Ripple acquired Strata Labs to join Xpring and focus on building the ILP infrastructure to make the ILP network more accessible to developers.
Other notable information and news from the fourth quarter include:
- The launch of xpring.io, a new website that will serve as a central hub for developers to manage everything they need to integrate payments into their applications.
- Xpring’s investment in Germany, one of the oldest crypto wallets in the industry. BRD will build on Xpring to support XRP and integrate it into the BRD wallet.
- Xpring’s investment in Towo Labs, which develops open source software to fully support XRP on hardware wallets.
New liquidity partnerships
Trading in derivatives with digital assets saw remarkable growth in 2019. XRP derivatives could continue to evolve in 2020 amid an ongoing general boom in crypto derivatives that will outperform spot volume many times over.
So far, XRP derivatives are available on several exchanges such as Binance, Huobi, OkeX, AAX and FTX. Additionally, XRP derivatives are a potentially important tool for managing exposures and transactions through Ripple’s cross-border payment solutions that leverage XRP.
The introduction of derivatives, which are generally available in more mature traditional asset markets, is an important step in the maturation of digital assets as they help improve the efficiency, liquidity and resilience of the markets.
Lending and lending
The digital asset borrowing / lending market saw significant momentum over the past year as that market is now considered a $ 5 billion industry. XRP is available on many of the largest crypto loan platforms including Genesis, Celsius, Nexo, and SALT.
The momentum has been fueled by several factors: low interest rates in many fiat currencies, an increasing number of digital asset market participants looking for working capital, and an increasing number of long-term digital asset owners looking to generate returns. While concerns about a “crypto credit bubble” arise, the growth potential for this market remains significant this year and beyond.
- Mining groups in China control 66% of bitcoin hashrate, according to a report by Coinshares. This is the highest China-controlled percentage since Coinshares started tracking hashrate in the past two years.
- Chinese President Xi Jinping called for more support and investment in blockchain technology. Weeks later, the Chinese central bank ordered crypto firms to cease operations and warned investors about digital currencies.
- Bitcoin fell to a six-month low in November following China’s restrictions and recent crackdown on crypto companies.
- Bitmain and Canaan announced their respective IPOs.
- Kraken continued its acquisition with the acquisition of the Australian exchange Bit Trade.
- CFTC chairman Heath Tarbert said in an interview that the increased use of derivatives with digital assets could help the industry mature. This is shortly after the start of the BTC options contract by CME, which saw a larger trading volume on the first day than the Bakkt contract of rival ICE.
- The SEC issued an Investor Alert to urge investors to exercise caution before investing in so-called “Initial Exchange Offerings” or IEOs via trading platforms.
- Former CFTC chairman J. Christopher Giancarlo announced the start of a nonprofit organization to work with consulting firm Accenture to develop a US-backed “Digital Dollar” project.
Industry player news
- JPMorgan and MAS announced the next phase of the Ubin project for cross-border interbank payments.
- Mark Zuckerberg, Facebook co-founder and CEO, testified before the House Financial Services Committee about the company’s Libra white paper.
- Ant Financial has partnered with Finablr to facilitate transfers for AliPay users. Ant Financial also raised $ 1 billion for another mutual fund for future fintech investments to expand its global footprint.
- TransferWise enables payments to some of the largest e-wallets in APAC, including GoPay (GoJek), OVO, DANA, GCash, PayMaya, and bKash. TransferWise has also partnered with GoCardless for recurring cross-border payments.
The report was updated on January 23, 2020 with certain corrected numbers for the ODL metrics.