Will The Low XRP Price Force Ripple To Dump Its Holdings? Exec Answers Community

XRP’s decline in recent weeks has led to questions among holders who worry that Ripple may be pushed into selling more of its XRP reserves to maintain operations. This concern resurfaced as discussions around Ripple’s shifting business model gained traction, especially with the company’s RLUSD stablecoin. 

The conversation was held on the social media platform X, where Ripple’s Chief Technology Officer, David Schwartz, stepped in to address whether a lower XRP price could force Ripple into additional token sales.

Ripple CTO Says Falling Prices Do Not Increase Selling Pressure

Schwartz’s comment came as a response after a user argued that Ripple might gradually shift its priorities away from XRP because RLUSD is tied directly to fiat reserves, unlike the cryptocurrency. The user’s argument is that this difference could leave Ripple less exposed to XRP’s price movements and more inclined to depend on the stablecoin during uncertain market periods.

This could create a scenario in which Ripple becomes insulated from XRP’s market swings, potentially making it less motivated to support the token if its price declines.

Schwartz pushed back strongly against that line of reasoning. He made it clear that the assumption that falling prices increase the company’s need to offload XRP is misguided. He pointed out that Ripple’s broader revenue structure now allows the company to operate without relying on market conditions to stay afloat. 

In his view, new income channels lessen the chances that Ripple would ever face a situation where it must sell XRP to sustain operations.

Ripple Needs To Diversify

Part of the tension around potential XRP sales comes from Ripple’s business model. The company has always earned a sizable portion of its income from controlled XRP sales, even though it also offered enterprise products such as cross-border payment solutions through RippleNet. 

However, public reports from previous years showed that these software licensing fees and enterprise offerings brought in smaller revenue compared to the revenue gained through XRP sales. This is why there have been concerns that heavy selling during market dips could weigh on XRP’s price.

An important part of Ripple’s token management is the escrow program, which unlocks 1 billion XRP tokens in scheduled monthly releases. This mechanism was originally designed to bring predictability to XRP’s circulating supply and prevent sudden large inflows into the market. 

Ripple typically returns most of the unlocked XRP (70% to 80%) back into escrow each month, releasing only a small amount for operational purposes. This structure limits the potential impact Ripple can have on market liquidity at any given time.

However, the company currently depends much on XRP sales, and there is a pressing need to look for more sources of income. Schwartz’s comments show that Ripple is not positioned in a way that requires dumping XRP, even as the token trades near recent lows.