Ripple, the blockchain-based startup and parent company to third largest cryptocurrency XRP, may have a discrepancy in its escrow reporting system.
According to a report published on May 16 by Coin Metrics, a blockchain analysis company, there were multiple points of discrepancy in Ripple’s reporting for their XRP escrow service. The report, titled “An on-chain analysis of Ripple’s escrow system,” included a deep dive into the digital blockchain of Ripple in order to gain “a full comprehension of the ledger and identify any unique behaviors that may affect creation of our data.”
While evaluating the XRP blockchain and Ripple’s escrow service, Coin Metrics reports finding, “several important discrepancies between what was publicly reported by Ripple and what was visible on the XRP ledger.”
In particular, the company claims to have found,
“Two quarterly markets reports under-reported the number of XRP released from escrow by a total of 200 million XRP ($84 million at current prices)
The “escrow queue” is implemented differently than announced, leading to a faster future release of escrowed funds compared to the announced schedule.”
The report also includes details of other parties “potentially associated with Ripple,” having released 55 million XRP from an unknown address that is not associated with the main escrow account for Ripple.
Coin Metrics reports attempting to contact Ripple via multiple channels over the discrepancy found in the escrow service, but claims to have not yet received a reply from the company.
Escrow support represents one of the more distinguishing features for Ripple and the XRP cryptocurrency. According to the official press release by Ripple announcing the feature when it was launched in March 2017,
“Escrow allows XRP Ledger and ILP [Interledger Protocol] to communicate to secure XRP for an allotted amount of time or until certain conditions are met. This can be used to hold funds until a service is completed, or until a moment in time such as a birthday.”
Escrow also represents the primary way that Ripple has managed to distance itself from XRP, despite controlling a majority stake in the currency. Of the 100 billion max supply for XRP, 55 billion was placed into escrow at the end of 2017, which clarified the market capitalization for investors at the time concerned with Ripple’s stake. Each month, 1 billion XRP is released from escrow directly to Ripple for their use in selling to institutional investors and operating the xRapid payment protocol. At the end of the month, any remaining XRP is placed back into the security of escrow, taking a position at the end of the queue.
Coin Metrics reports a discrepancy with Ripple returning XRP to escrow. Rather than unused coins going to the back of the queue,
“On-chain data however tells a different story. It seems that instead of locking unused funds into the first slot (i.e., the first month) with no existing escrow, they were locked in such a way to maintain the fixed amount of 1 billion XRP in escrow per month.”
The analytics company reports that escrow’s implementation has technically been successful in allowing users and investors a direct-access ledger for auditing the movement of XRP by Ripple, thereby increasing transparency. However, the most recent discovery of discrepancies in the escrow ledger requires a response from Ripple, which has yet to be issued.
The post Coin Metrics: Discrepancies Found in Ripple XRP Escrow Reporting appeared first on Ethereum World News.