A new report from crypto data startup Messari estimates that the true market capitalization and circulating supply of the digital asset XRP is markedly less than what data sources currently present.

As depicted on data providers like CoinMarketCap as well as Ripple – the distributed ledger tech company closely linked to the digital asset – XRP’s circulating supply is pegged at roughly 41 billion tokens. But in its report, Messari posits that of that figure, 19.2 billion XRP “may be illiquid or subject to significant selling restrictions” tied to daily trading volume, including “at least 6.7 billion XRP” held by Ripple co-founder Jed McCaleb that are subject to an agreement dating back to 2014.

In addition, Messari said that it believes that the circulation figure includes 5.9 billion XRP pledged by Ripple co-founder to a nonprofit entity called RippleWorks, an amount that it contended hasn’t been delivered. As well, Messari identified 2.5 billion XRP held by RippleWorks that are also subject to daily selling restrictions.

Further, the report also estimates that as much as 4.1 billion XRP sold via XRP II, Ripple’s money-services business, is also subject to selling restrictions. But Messari notes that “it is impossible to track the magnitude of this illiquidity without direct disclosures from Ripple, so we use a reasonable estimate.”

All told, these factors have led to the market cap of XRP being “likely overstated” by more than $6 billion, according to Messari’s reasoning.

Further, in its report, Messari estimated that the figure could ultimately be higher, explaining:

“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. In addition, we believe the actual amount of ‘restricted’ XRP in distributions to investors, banking partners, and team member may be significantly higher than our initial estimates reflect.”

The report notes that it sought input from Ripple and RippleWorks before the report’s publication but hadn’t heard from the company, which Messari contended results in questions about how the restrictions work in practice.

“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. More than 99% of XRP trading volume appears to come from overseas exchanges, many of which have been suspected of wash trading,” the report states.

CoinDesk reached out to Ripple for comment prior to the report’s release but did not hear back by press time.

On Thursday, Ripple released its Q4 report, noting that average daily XRP volume was $585.7 million. The firm sold $88.88 million programatically – an increase compared to its third-quarter figure of $65.27 million – and $40.15 million in “institutional direct sales,” representing a decrease from Q3’s $98.06.

Image Credit: Piotr Swat / Shutterstock.com

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