Above is a visual representation of XRP’s money flows in the past month. Each bubble represents a specific amount of tokens that has changed hands on the chain within the last 30 days, which we call “active supply”.
Ripple’s XRP is currently the third largest cryptocurrency by market cap, after Bitcoin (BTC) and Ethereum (ETH). It was launched in 2012 to bring financial services to the 1.7 billion adults who lack a bank account worldwide. The blockchain’s focus on cross border payments, although widely successful and global in reach, has also been heavily criticized for being too centralized and opaque in its management of funds.
By publishing XRP’s bubble chart in our data co-op, our goal is to bring more transparency to the network’s on-chain activity. Below are four key observations we made when analyzing XRP transactions.
4 Facts About XRP Money Flows
1) 1B XRP is released from escrow each month, with just 10% hitting exchanges.
In the bubble chart below, the move of one billion XRP from Escrow (in yellow) to the Foundation (turns red) is clearly visible on May 1st. This matches an announcement made by the foundation outlining the Ripple supply schedule. 55 contracts of 1 billion XRP were created and are due to expire at the first of each month.
Looking at the bar chart below we can see that approximately 90% of that amount was immediately re-escrowed, and 10% ultimately wound up on exchanges, where it is presumably sold. The Ripple Foundation’s treasury management has been criticized in the past for being opaque, but their activities over the last 30 days do not conflict with the announcement linked above.
2) Daily activity is dominated by transactions between top movers and exchanges.
This is evidenced by the flow of assets going back and forth between the top movers in light blue and the exchanges in dark blue. The fact that these users are only trading with exchanges suggests that most people using XRP are either market makers or speculators, and not actual consumers.
3) Ripple co-founder is using Ripple’s DEX to sell his XRP.
On May 2nd the news came out that Ripple cofounder Jed McCaleb sold 1.8 Million XRP a day during the month of April, totaling at least 54M tokens in a month. This is equivalent to $11.7M at the time of press.
McCaleb’s wallet falls into the top movers category on the bubble chart. Flipside observed daily flows to another wallet owned by McCaleb, where he sells his XRP for USD using Ripple’s built-in decentralized exchange. He then sent his USD to Bitstamp to cash out on April 7th and again on May 5th. McCaleb’s wallet currently holds 65MM XRP, suggesting that his selling may continue for at least 2 months.
4) Unique pattern in XRP’s weekly activity shows little consumer usage.
The bar chart above shows a clear pattern, with significantly lower XRP activity on weekends than during business days. This is not the case for other chains such as OAN or Zilliqa, who’s activity on exchanges is instead constant throughout the week. This suggests that the majority of XRP transactions are sent by professional investors or payment processors such as MoneyGram and Intermex.
Visualizing Complex Token Flows
By mapping out XRP’s active supply, we are able to understand how it is distributed and used by the network’s key groups, in this case : exchanges, supply management (Ripple-controlled wallets, escrow, and fees), other financial services (e.g. wallet providers and loan platforms), and users. Within the user group, we’ve also used behavioral analysis to distinguish the most active wallets, which we call “top movers”, from less active wallets.
The flow of assets between all existing groups simultaneously is a very powerful way to spot consistent patterns (e.g. the constant exchange of assets between top holders and exchanges), as well as major events (e.g. when a large tranche of new supply is minted, or exchange activity increases drastically).
We created the bubble chart as part of a larger transparency initiative for partner projects to share our on-chain insights with their communities. If you’re a blockchain project and would like to join the Data Cooperative, you can reach out to firstname.lastname@example.org.