The potential XRP market cap may be overestimated.
To say it is a recent report by Messari that has studied the data concerning the circulating supply of XRP (the Ripple cryptocurrency).
The market capitalisation of a cryptocurrency is equal to the result of the price of a single coin multiplied by the total number of coins in circulation, or the so-called circulating supply.
If Messari’s estimates are correct, the circulating supply and consequently the potential market cap of XRP would be overestimated by 48%. In other words, instead of the approximately $13 billion currently calculated on CoinMarketCap for example, the real value would be just under $7 billion.
This would put XRP in third place in the cryptocurrency market cap ranking, far behind Ethereum.
The data published by Messari, in fact, estimates that the real circulating supply of XRP would be just under 22 billion tokens, compared to the over 40 officially declared.
Ripple is expected to publish the 2018 Q4 Transparency Report shortly, but it is unlikely that different figures will be given than those currently available through XRP’s official APIs regarding the official circulating supply.
The Messari team asked Ripple to comment on its analysis, but to date, no official response has been received.
Where does this potential overestimation of XRP come from?
The problem arises from the fact that a large number of XRPs that are in circulation, would instead be frozen by some of Ripple’s partners, including a foundation and co-founders.
To date, in fact, all 100 billion XRPs have already been created, but only 41 have been placed on the market, while the remaining 59 are still held by Ripple itself and will be released over time, but for this reason, they should certainly not be counted in the circulating supply.
According to Messari, there are also about 19 billion more XRPs that, although officially released on the market, are not available for use because they are frozen by partners.
Therefore, the total XRPs actually in circulation would be 22 billion, and not 41 billion.
For example, Ripple co-founder Jed McCaleb, who has now left the company and works on the Stellar project of which he is a co-founder, holds 6.7 billion XRPs that he can only sell at the theoretical rate of 1% of the daily trading volume.
However, McAleb said:
“What I can sell a day is significantly less than 1% of the total daily volume. I’m not sure I’m at liberty to say how it (reference trading volume) is calculated”.
In addition, other Ripple co-founders, such as Arthur Britto and Chris Larsen, may also have similar restrictions.
So, according to Messari’s calculations, the total XRP tokens that would not really be calculated in terms of potential market cap would be 19.2 billion, 48% of those officially declared in circulation.