A new crypto data report from startup Messari estimates that the actual market capitalization and circulating supply of the digital asset XRP are significantly lower than figures reported by common data sources.
Major data providers such as CoinMarketCap and Ripple — the distributed ledger technology company closely associated with the digital asset — currently list XRP’s circulating supply at roughly 41 billion tokens. In its report, Messari argues that of that total, 19.2 billion XRP “may be illiquid or subject to significant selling restrictions” tied to daily trading volume. Messari’s estimate includes at least 6.7 billion XRP held by Ripple co-founder Jed McCaleb, which are subject to a contractual agreement between him and Ripple.
Messari also says the circulating figure appears to include 5.9 billion XRP pledged by a Ripple co-founder to a nonprofit called RippleWorks — an amount that has not been delivered — and it identifies an additional 2.5 billion XRP held by RippleWorks that are subject to daily sale limits.
The report further estimates that 4.1 billion XRP sold through XRP II, Ripple’s financial services business, are also subject to sale restrictions. Messari notes, however, that “it is impossible to trace the extent of this illiquidity without direct information from Ripple, so we use a plausible estimate.”
Taken together, these factors lead Messari to conclude that XRP’s market capitalization is “likely overstated” by more than $6 billion.
After the report’s release, a Ripple spokesperson challenged Messari’s findings, stating:
“Not only does this report contain several incorrect assumptions regarding lockups and selling restrictions, but the entire report relies on a flawed market cap calculation. While decentralized digital assets like XRP differ from traditional equities, the term ‘market cap’ is still a very simple calculation: current price X total number of the asset = market capitalization. That places the current market cap of XRP at roughly $31 billion. We believe any other calculation of XRP market capitalization is not an accurate representation of the truth.”
Messari allows that its own estimate could ultimately be higher. The report explains:
“In reality, this estimate may prove conservative, as it contrasts with XRP trading volumes that have consistently fallen well below those of EOS and Litecoin — two cryptoassets whose current reference market capitalizations are only 17% and 15%, respectively, of XRP’s. We also believe the actual amount of XRP that is ‘restricted’ via distributions to investors, banking partners, and team members could be significantly greater than our initial estimates reflect.”
The report notes that Messari sought input from Ripple and RippleWorks prior to publication but did not receive responses from the company. Messari says Ripple challenged the report’s assumptions about how the restrictions operate in practice.
“Ripple did not share the methodology or exchange-level data it uses to calculate trading volume for XRP, a critical data point that determines selling restrictions. More than 99% of reported XRP trading volume appears to come from offshore exchanges, many of which have been suspected of wash trading,” the report states.
On Thursday, Ripple published its Q4 report, noting that average daily XRP volume was $585.7 million. The company reported programmatic sales of $88.88 million — up from $65.27 million in Q3 — and $40.15 million in institutional direct sales, down from $98.06 million in the prior quarter.