Ripple’s CEO Brad Garlinghouse said a large sum of the company’s profits generated from the sale of XRP. While Garlinghouse insists that Ripple has been cash-positive as a company, he noted that removing their revenue from XRP would make them significantly “less profitable.”
Since its inception, XRP, the third largest cryptocurrency by market cap, has been marketed as a cross-border settlement solution. However, the recent statement from the top executive of Ripple also describes the capabilities of the crypto-currency to keep the company profitable.
In a statement to the Financial Times, Garlinghouse indicated that while the company was positive in cash flow, a large chunk of its profits came from XRP sales. Taking XRP off Ripple would take a heavy toll on the company.
“Well XRP is one source. I don’t know how to answer that because if you took away our software revenues, that would make us less profitable. If you took away all our XRP, that makes us less profitable,” he said.
The company’s critics didn’t the fact that Ripple would not be profitable or positive in cash flow without selling XRP surprising, as they questioned Ripple’s partnerships with remittance services like MoneyGram.
While XRP was one of the main sources of revenue for Ripple, since the end of last year the profits from XRP sales have dropped considerably.
To act as “disciplined, responsible stakeholders,” the company deliberately cut its programmatic sales in Q4 2019.
The company sold 13 million XRP tokens over the last quarter of 2019 only through institutional direct sales (OTC) which represented a five-fold decline from the total sales it made in Q3 2019.
XRP Incentive For Companies Using Ripple’s Remittance Solutions
Garlinghouse also revealed in the interview that Ripple was using XRP to incentivise companies using its remittance solutions. He explained that the size of the incentives depended “on the shape and size and type, and how high a priority these companies are.”