The decline of XRP in recent weeks has raised questions among holders who worry that Ripple could be pushed to sell more of its XRP reserves to sustain operations. These concerns resurfaced as discussions about Ripple’s changing business model gained traction. especially with the company’s RLUSD stablecoin.
The conversation took place on the social media platform X, where Ripple’s Chief Technology OfficerDavid Schwartz, stepped in to tackle whether a lower XRP price could force Ripple into additional token sales.
Ripple CTO says falling prices won’t increase selling pressure
Schwartz’s comment came as a response after a user has argued that Ripple could gradually shift its priorities away from XRP because, unlike the cryptocurrency, RLUSD is directly tied to fiat reserves. The user’s argument is that this difference could leave Ripple less exposed to XRP’s price movements and more likely to rely on the stablecoin during uncertain market periods.
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This could create a scenario where Ripple becomes isolated from XRP’s market fluctuations, potentially leaving it less motivated to support the token if its price falls.
Schwartz strongly opposed this reasoning. He made it clear that the assumption that falling prices will drive the company’s need to divest XRP is misleading. He pointed out that Ripple’s broader revenue structure now allows the company to operate without relying on market conditions to stay afloat.
According to him, new revenue channels reduce the chance that Ripple will ever find itself in a situation where it has to sell XRP to continue its operations.
Ripple needs to diversify
Some of the excitement around potential XRP sales comes of Ripple’s business model. TThe company has always earned a significant portion of its revenue from controlled XRP sales, even as 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 business offerings generated smaller revenues compared to revenues from XRP sales. This is why there are concerns that heavy selling during market dips could depress the price of XRP.
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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 make the circulating supply of XRP predictable and prevent a sudden large influx into the market.
Ripple typically returns the majority of the unlocked XRP (70% to 80%) back into deposit each month, with only a small amount released for operational purposes. This structure limits the potential impact Ripple can have on market liquidity at any given time.
However, the company is currently heavily dependent on XRP sales and there is an urgent need to look for more revenue sources. Schwartz’s comments show that Ripple is not positioned in a way that requires dumping XRP, even though the token is trading near recent lows.
Featured image created with Pxfuel, chart from Tradingview.com