According to the latter report by the research firm Messari, the XRP Ledger (XRPL) saw a significant increase in activity in the first quarter of 2023. Daily active addresses and daily transactions were up 13.9% and 10.7% QoQ, respectively.
The price of XRP also showed an impressive 56% increase quarter-on-quarter (QoQ), from $0.35 to $0.54. This price increase has surpassed the total market cap of crypto during the same period, largely due to positive news regarding the pending case between Ripple and the Securities and Exchange Commission (SEC).
XRP Ledger Network activity is increasing
The XRP Ledger is a blockchain network that has been operational for over a decade. It is known, among other things, for its fast and energy-efficient options for cross-border payments.
It offers a variety of native capabilities, including issued currencies, a decentralized exchange, escrow functionality, and token management. These features allow the XRPL to perform many of the same functions as other networks, even though it does not support smart contracts.
The chart above shows that the XRPL saw a significant increase in overall network activity metrics in the first quarter. Daily active addresses and transactions increased by 13.9% and 10.7% respectively. The increase in the total number of active addresses was largely due to the 17.1% growth in receiving addresses from 47,000 to 55,000. However, sending addresses fell 7.2% QoQ, further separating the metric from receiving addresses.
Despite 141,000 accounts being deleted in the first quarter, the total number of addresses increased. This is because, unlike many other blockchain networks, the XRPL allows accounts to be deleted in order to recover the XRP deposit deposited during account creation. This escrow encourages account deletion, and the total address metric is more important.
According to the report, the XRPL is exerting deflationary pressure on the total supply of 100 billion XRP by burning transaction fees. However, only about 10 million XRP have been burned since the creation of the XRPL. To counteract this burn rate, 1 billion XRP is allocated monthly to Ripple. Any XRP not issued or distributed by Ripple during that month will be returned to escrow. This system will continue until the remaining 48 billion XRP becomes liquid.
Unlike many other cryptocurrency networks, the XRPL does not distribute rewards or transaction fees to validators. Instead, validators are incentivized by supporting network decentralization. This is similar to a full node for Ethereum/Bitcoin instead of a validator/miner.
NFT market adapts to XLS-20 standard
The XRPL standardized NFTs on its network with the XLS-20 standard, enabled in October 2022. Five new transaction types were created to accurately track all NFT activity on the network. However, NFT coins fell 40.4% quarter on quarter, from 732,000 in Q4 to 436,000 in Q1, while accepted NFT offerings fell 25.1% quarter on quarter, from 370,000 in Q4 to 277,000 in Q1.
In addition, in NFT sales volume, XPUNKS remained the all-time leader with 15.7 million XRP ($8.5 million as of Q1). However, Core Apes Club and RipplePunks rivaled XPUNKS in sales volume in Q1, with each collection doing 400,000-500,000 XRP in quarterly volume. RipplePunks averaged 141,000 XRP ($76,000) in monthly sales volume and 960 monthly sales in Q1.
Overall, the XRPL’s deflationary mechanism of burned transaction fees and focus on decentralization and trust between nodes through unique node lists are key factors for its success. As the network continues to grow and evolve, there are likely to be further developments and innovations in the platform’s native capabilities.
Featured image from iStock, chart from TradingView.com