The open-source crypto information hub Messari issued a report claiming that XRP’s market cap may be overstated by as much as $6.1 billion.
The report details some of the methodology used to draw this conclusion, claiming that XRP’s actual net worth could be overstated by 48 percent. Messari recommended that “major indices, including Bloomberg-Galaxy, MVIS CryptoCompare, Bitwise and others, as well as passive funds such as Grayscale’s Digital Large Cap, and Bitwise’s 10 Large Cap Crypto, consider revising their circulating supply assumptions for XRP downward to more appropriately reflect its true network liquidity, and cease to rely on Ripple’s XRP API for accurate circulating supply figures.”
The report added that a more accurate reading will require actual disclosures from Ripple. The report claimed that “Ripple has not shared the methodology or reference exchange data it uses to calculate trading volume for XRP, a critical data point that drives selling restrictions.” It claims that 99 percent of XRP trades take place overseas, and at least some percentage is “wash trading,” used to artificially inflate prices.
Experts from Messari looked at data from public tax records and Ripple’s own transparency reports and claimed that the numbers do not match up with the company’s own claims about its liquidity. In fact, the report goes so far as to claim that “19.2 billion of the 41.0 billion XRP currently quotes as ‘in circulation’ may be illiquid or subject to significant selling restrictions,” finally adding that “in reality, this estimate may prove to be conservative, as they belie XRP trading volumes which have consistently fallen well below that of EOS and Litecoin, two cryptoassets whose current referenced market caps are a mere 17% and 15% of XRP’s, respectively.”
Needless to say, this report has hit the Ripple community like a thunderbolt. As one example of the outrage from community members, Messari founder Ryan Selkis made a public plea on Twitter, asking Ripple executives to actively denounce threats made against Selkis’ family members.