Something is happening with Ripple lately.
Nine months ago, when we created our last article about Ripple, the cryptocurrency project’s native XRP token was standing at $0.235.
Like most digital assets, XRP was hit by March’s market crash but recovered quickly. Since then, apart from some minor upwards and downwards price movements, the cryptocurrency’s price remained relatively stable.
However, from November 19, XRP has been on a bull run, surging from $0.288 to $0.567 (as of December 10), representing a nearly 97% increase.
But what is behind the recent XRP boom, and what were the most important Ripple events since we have created our last article about the project?
1. Flare Network and the Spark Airdrop
The Flare Network is among Ripple’s most anticipated (partner) projects.
What’s more interesting about Flare is that the blockchain solution integrates with the Ethereum Virtual Machine (EVM) and has the capability to create two-way bridges between different cryptocurrency networks.
As you may know, the XRP Ledger (XRPL) – the blockchain network powering Ripple – functions as a global payment and foreign exchange system. While Ripple’s network is highly scalable and XRP transfers are cheap and lightning-fast, its functionality is very limited in other areas.
And this is where Flare comes into play. By bridging the XRP Ledger with a blockchain network like Ethereum, developers can add smart contract functionality to XRP, a token that doesn’t natively include such features.
With smart contract support, developers can build decentralized applications as well as create new ecosystems and use-cases around XRP.
In fact, the project has already been working on FXRP, which refers to the trustless representation of XRP via the Flare Network.
FXRP and other tokens issued via Flare are created using the project’s native Spark cryptocurrency as collateral. In addition to that, Spark has further functionalities, such as network security and governance as well as on-chain oracle data providing.
Flare’s potential has generated hype among Ripple community members who are keenly waiting to participate in the upcoming Spark airdrop.
Supported by most cryptocurrency exchanges (including AAX), users will receive a specific amount of Spark based on the number of XRP coins they are holding during the airdrop that will occur on December 12.
2. XRP Buybacks
Ripple Labs, the organization managing the cryptocurrency project, has been purchasing XRP since the second quarter of 2020.
According to the company’s Q3 2020 report, Ripple did $45.55 million worth of XRP buybacks, a practice the project stated to potentially continue in the future to support healthy markets.
Cryptocurrency buybacks are a way to limit inflation and maintain a stable price for digital assets. For that reason, Ripple’s purchases definitely had a positive effect on the XRP price and may have contributed to the token’s recent bull run.
Also, while Ripple Labs still sells XRP to institutional clients via OTC markets, the project has halted programmatic token sales (e.g., via crypto exchanges) since Q3 2019.
As a side note, the company’s CTO, David Schwartz, has recently stated that the community could force Ripple to burn all its 48 billion XRP holdings.
While it could certainly cause some financial issues for the company, burning a large share of the total XRP supply could positively affect the cryptocurrency’s long-term value.
3. New Ripple Services
Flare Network is not the only solution introduced recently in the Ripple ecosystem.
In October, the project launched the Line of Credit service on its institutional payment system RippleNet to provide upfront access to capital for customers to purchase XRP via a simple credit arrangement.
A month later, Ripple registered a new trademark with the U.S. Patent and Trademark Office (USPTO) under the categories of “insurance and financial” and “advertising and business.”
While neither the patent’s description nor the company have provided much information about Ripple’s mysterious new project (called PayString), it could certainly have contributed to the hype in the crypto community and among XRP supporters.
Is This the Rebirth of XRP?
All of the events we have explored in this article could have had either a minor or a major effect on the cryptocurrency’s recent price movements.
What this means for XRP over the long term, we don’t know. However, we are certain that Ripple has exciting weeks and months ahead.
Also, don’t forget to check the following article to participate in the upcoming Spark airdrop on AAX.