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Ripple CTO Explains Why XRP Lockups for Investors Were Stopped

Mon, 17/07/2023 - 11:11
Ripple CTO Explains Why XRP Lockups for Investors Were Stopped
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An XRP community member who goes by the name "RealXRPboy" has offered a throwback in time by sharing a post by Ripple CTO David Schwartz way back.


In the post, Schwartz underlined 10 points under the caption, "Here's how I've been explaining it recently." At the end of the post, Schwartz stated, "I think that pretty much covers our vision. There is of course no guarantee for success."

As usual, the throwback elicited reactions from members of the crypto community who sought to know what Schwartz meant in certain lines of the post.

A sentence in the post reads, "Anyone who gets XRP from us as some part of a deal with a lockup has their incentives aligned with ours. They want the long-term price of XRP to go up too."

At the time, the option was offered to institutional buyers, who might buy XRP with a lockup.

Responding to the user, Schwartz answered that investor lockups were stopped a long time ago as they failed to produce the desired results.

"We stopped using lockups a long time ago. They don't really work the way I initially hoped they would," Schwartz answered.

Simply defined, token lockup is the practice of limiting the transferability of tokens for a predetermined amount of time, including those obtained through airdrops, initial coin offerings (ICOs) or sale events. Investors are not permitted to transfer or sell their tokens during the lockup period.

A token lockup has two purposes: first, to incentivize long-term investment in a project or company, and second, to prevent large amounts of tokens from flooding the market.


That said, it bears mentioning that in 2017, Ripple placed 55 billion XRP into time-based escrows for the second reason: to prevent large amounts of tokens from flooding the market and potentially lowering the XRP price.

Ripple escrows ensure that the supply of XRP in circulation is predictable and increases at a slow but steady rate.


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