Ripple's XRP has had a disastrous time in the past two years. In a period when other large-cap cryptocurrencies have attempted a comeback, XRP has lagged significantly. According to informed by Crypto report Previously, digital asset emerged as the worst performing among the top 20 cryptocurrencies during the first quarter of 2020.
At $ 0.20, the cryptocurrency with close ties to the San Francisco-based financial technology company, Ripple, it remains trapped 94 percent below its all-time high of January 2018. Cryptocurrency data and research platform Messari recently searched under the hood to identify why XRP has performed regrettably.
The company noted that this may have something to do with the currency's circulating supply, which subsequently resulted in XRP having the highest inflation rate among large-cap crypto.
XRP inflation rate is quite alarming
The data provided by Messari shows that there is now 20.5% more XRP in circulation this year compared to last year. This is because XRP has an annual inflation rate of 20.5%, the highest among large-cap cryptocurrencies.
According to Messari, there are currently approximately $ 29.86 billion XRP tokens in circulation. This is equivalent to only 30% of the maximum XRP supply. For comparison, 87.5% of the maximum BTC supply is already in circulation.
However, the reason why the circulating supply of XRP is skyrocketing at surprising speed is not a mystery. Ripple, the blockchain firm behind the token, unlocks $ 1 billion XRP at the beginning of each quarter. Millions of these tokens are used to grow the XRP ecosystem through strategic investments and partnerships.
Although Ripple actually needs to sell XRP to expand the utility of the token, this strategy has not been well received by the majority of the crypto community as they believe that constant sales inhibit the growth of XRP value.
Ripple has unlocked at least $ 5 billion XRP of the escrow so far. With $ 49.4 billion still locked in wallets in custody, sales are likely continue for the next 21 years.
How did other large-cap cryptocurrencies fare
In addition to XRP, Tezos (XTZ) is the only other major cryptocurrency with a relatively high inflation rate of 13.1%. But unlike XRP, Tezos has performed quite well in recent months with over 55% annual earnings. The currency has even consolidated its position among the top ten cryptocurrencies. Most observers believe XTZ is shining because of its security model, Proof-of-Stake (PoS), which is gaining ground in the cryptocurrency industry.
Other major cryptocurrencies like Ethereum (ETH), EOS, and Litecoin (LTC) have an inflation rate of 4.7%, 2.6%, and 5.1% respectively.
The OG cryptocurrency recently completed its third decline in production. As such, the 12.5 BTC reward dropped to 6.25 BTC, resulting in fewer bitcoins per day. BTC's inflation rate now stands at 3.8%, which is lower than gold. It is also significantly lower than XRP's inflation rate.
Meanwhile, XRP is worth $ 0.197 at press time, a 1.76% increase on the day.