Ripple has introduced native escrow on its layer 1: XRP Ledger. Users can now lock XRP $XRP with conditional release.
Ripple has integrated an escrow feature directly into its layer 1, the XRP Ledger. This update offers investors more control and security in managing their crypto assets.
In this article, we'll look at how the new native escrow system on the XRP Ledger works, what makes it interesting, and what applications it could have. We'll also discuss how it could become a key tool for protecting funds during the next bull run.
A new feature designed for users
The new escrow service on XRP Ledger allows users to temporarily lock their tokens. They can only be unlocked under certain conditions, such as a timer expiring.
The unique feature of this new feature is that it does not require third-party intervention, as it works automatically and is integrated into the XRP Ledger architecture.
Ripple has been using escrow since 2017 to manage XRP supply and maintain market stability. One billion tokens are automatically unlocked on the first of every month, preventing sudden inflows that could cause the asset's price to plummet.
The new feature, however, is different. It's designed for users (individuals, businesses, developers). Anyone can lock up a certain amount of XRP in escrow and decide in advance when it will be unlocked, under what conditions, and who will receive it.
What applications can the new escrow system have?
With the new escrow feature, users can lock up their XRP for a predetermined period. This is a useful strategy to avoid impulsive selling, especially during periods of high volatility. For example, someone who bought XRP at $3.65 might be tempted to panic sell if the asset were to drop below the $3 mark. Locking tokens in escrow helps resist pressure.
But the new feature isn't limited to managing your finances. It also opens the door to new opportunities for large institutions operating on the XRP Ledger.
Businesses can use it to offer crypto financial services or to automate trade agreements with other operators.
Everything suggests that this feature was designed with large investors and businesses in mind. For small investors, the transaction costs may be inconvenient.
XRP drops 16% in one day
Just today, one of those crashes that test even the most experienced traders occurred. This morning, the asset dropped sharply, suffering a hefty 16% loss, along with the rest of the altcoin segment .
Within hours, XRP rose from $3.55 to a low of $2.97 before regaining momentum as buyers returned.
Those who hold a significant portion of their assets in XRP struggle to stay calm when the asset plummets. Fear usually takes over, believing the token will continue to decline, and they try to cut their losses. And it's precisely in these moments that escrow can be useful.
Driven by buying pressure at $3, the asset rose to $3.10. Its relative strength index (RSI) returned to 59, signaling solid upward pressure but not overbought conditions.
Despite today's correction, the outlook for XRP remains positive in the long term.
If the asset manages to maintain its upward trend, it could push towards $3.40 and $3.55 by the end of the month. In August, the altcoin could then rise further towards $4 and perhaps even reach $5. Some analysts estimate more ambitious targets for the asset of $15 in the coming months.
The new escrow feature could boost institutional adoption of Ripple, reinforcing bullish forecasts for XRP later this year.
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