XRP's supply model is unique among major cryptocurrencies. All 100 billion XRP were created at the network's launch in 2012 with no mechanism to create more. This fixed maximum supply gradually decreases as transaction fees are burned, making XRP technically deflationary over very long timeframes.
The circulating supply represents XRP that is freely tradeable on the open market. This includes XRP held by individuals, institutions, exchanges, and any entity outside of Ripple's escrow. The circulating supply has gradually increased as Ripple releases XRP from escrow, but this rate is predictable and transparent.
Ripple's escrow is a cryptographic lockup that holds a significant portion of total XRP. The escrow releases up to 1 billion XRP per month, but Ripple typically uses far less and returns the remainder to the end of the escrow queue. This mechanism was created in 2017 to provide supply predictability and reduce concerns about Ripple dumping XRP on the market.
The difference between total supply and maximum supply matters for XRP. The total supply is the original 100 billion minus all burned XRP. The circulating supply is the total supply minus escrowed XRP. These distinctions affect market cap calculations and valuation models.
Supply velocity is another important metric. XRP's utility in payments means tokens are frequently transacted, creating a high velocity of money. Unlike Bitcoin, which is primarily held as a store of value, XRP's payment use case means the same tokens can facilitate enormous transaction volumes, effectively multiplying the network's capacity beyond what static supply numbers suggest.