XRPL's Escrow Strategy is Hurting Its Token's Price

Many analysts quickly point fingers at the ongoing Securities and Exchange Commission (SEC) and class action lawsuits against Ripple Labs as the likely culprits

Several analysts quickly point to the ongoing Securities and Exchange Commission (SEC) and class action lawsuits against Ripple Labs as the likely culprits for XRP's continuing undervaluation. However, some critics argue that the escrow strategy model of the XRP Ledger (XRPL) is actually hurting the token's performance.

As Bill Morgan, a lawyer who is also followed on X (formerly Twitter) by Ripple Chief Legal Officer Stuart Alderoty, likes to say, Ripple's escrow mechanism testifies to the "responsible management of a huge but ever-shrinking amount of XRP under control ". This has somehow led to criticism of the company's strategy, which is said to suppress XRP prices.

Many XRP holders are probably already aware of the mechanics of their distributed ledger technology (DLT) deposit, but some reflected our previous position that without a commensurate increase in demand, the price of the token would stagnate or gradually decline. On the other hand, the absence of significant price changes in the cryptocurrency during the current market rally would force investors to look for more profitable alternative coins.

However, others have argued that it is not the deposit itself that is suppressing the price of XRP. Instead, it's Ripple's post-deposit selling strategy that lowers the value of the token.

There has been a shocking development in this matter recently. According to market watchers, Ripple recently transferred a total of 470 million XRP, currently worth $240 million, to a wallet it kept for its token sale.

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