Ripple plans to unlock 1 billion XRP tokens from its trust accounts on January 1, 2025. The monthly practice could again have negative impacts on the XRP price.
On January 1, 2025, Ripple will again release 1 billion XRP tokens from its trust accounts. This continues a long-standing tradition of the company to release large amounts of XRP every month. The goal of this strategy is to control the supply and ensure market stability.
The unlock occurs in three transactions: 200 million, 300 million, and 500 million XRP. Together, these transactions account for 1.74% of the currently circulating supply of 57.25 billion XRP. Additionally, they correspond to 2.63% of the remaining 38 billion XRP that is still locked in trust accounts.
Why Ripple uses a trust system
Ripple placed 55 billion XRP into a trust system in December 2017. This system was developed to regulate the release of XRP and ensure transparency for investors and users. Every month, 1 billion XRP is automatically released. Unused tokens are typically locked back into new trust accounts to avoid flooding the market with too many tokens.
This approach has helped create a degree of predictability in the distribution of XRP. Critics argue that these unlocks could put pressure on the price as they increase the available supply. Supporters argue that Ripple's approach stabilizes the market and builds long-term trust.
What to expect from the unlock in January
The upcoming release will be handled from two important wallets of Ripple. These wallets are known to hold and release large amounts of XRP. The 200 and 300 million XRP come from locks established in December 2020 and January 2021. The 500 million XRP was also locked in January 2021. These releases mark the end of the use of these specific wallets, while Ripple still has other trust accounts that contain tokens.
In December 2024, Ripple also released 1 billion XRP. Of these, 800 million XRP were locked into new trust accounts, which will not end until 2028. The remaining 200 million XRP were reserved for future distributions. Ripple used part of these tokens for sales and moved amounts to other wallets, both known and unknown. In November 2024, Ripple recorded the largest single sale in seven years, selling 470 million XRP from the released tokens.
The recurring unlocks of XRP pose a challenge for price development. A large number of released tokens can create selling pressure that affects the price of XRP. Ripple tries to mitigate this effect through controlled use of the released tokens. Often, large portions of the released tokens are locked back into trust accounts, while smaller amounts are used for sales and operational purposes.