XRP’s Original Intended Use and Its Circulating Supply Misconceptions

Crypto author and co-founder of Anodos Finance Panos Mekras has addressed what he calls a major misconception about XRP’s circulating supply and its original intended use.

Crypto author and co-founder of Anodos Finance Panos Mekras has addressed a major misconception about XRP’s circulating supply and its original intended use.

In a new post, Mekras pointed out that all 100 billion XRP were created and put into circulation in 2012 when the XRP Ledger (XRPL) officially launched.

Contrary to popular belief, there has never been any inflation of XRP, meaning no new tokens have been created beyond the initial supply. This is because the XRPL doesn't rely on mining or Proof-of-Work (PoW) like Bitcoin to distribute its tokens.

Instead, the three core developers—David Schwartz, Arthur Britto, and Jed McCaleb—initially made XRP freely available through a Genesis wallet, allowing anyone to claim as much as they desired.

As Ripple Labs (then called OpenCoin) was formed, the team sought ways to distribute XRP fairly. This led to widespread giveaways, airdrops, and faucet programs that dispensed thousands of XRP daily.

However, Mekras noted that these distribution methods were eventually stopped due to their impact on XRP’s price stability.

By 2017, Ripple decided to lock the majority of its remaining XRP into escrow, a built-in feature of the XRPL, to prevent potential large-scale sell-offs that could further destabilize the price.

This action, while intending to stabilize the market, has led to confusion regarding the circulating supply, especially with how CoinMarketCap (CMC) and other market tracking websites calculate it.

While XRP has been active since 2012, Mekras pointed out that CMC excludes Ripple’s escrowed tokens from circulation despite not accounting for similar escrows by other XRPL users.

If escrowed XRP is considered out of circulation, then all escrows—not just Ripple’s—should be excluded, Mekras asserted.

This statement comes as community members continue to discuss the possibility of XRP reaching $10, considering the varying narratives around its purpose and level of integration in the financial system.

One commenter questioned how XRP could reach $10 with "people still debating if it's good for banks or if it has no use case."

Another pointed out that Ripple has partnerships with financial institutions, an assertion that seems to contradict claims that XRP wasn't intended for banks.

Mekras's post also triggered skepticism about Ripple's role in the XRP ecosystem, with some investors believing the company has used XRP mainly as a funding vehicle, benefitting from retail investors while delaying real utility.

"Future promises never deliver," one critic stated, adding that the true adoption of XRP is covered by non-disclosure agreements.