Cardano founder Charles Hoskinson has publicly criticized Ripple's approach to managing its XRP token, proposing a major shift: Ripple should allocate 20% to 30% of its revenue to repurchase XRP from the open market. This, he argues, would directly benefit token holders instead of just the company.
Buyback vs. Sales Model
In a recent interview, Hoskinson contrasted Ripple's current practice of selling XRP to generate revenue with a buyback model. He claimed that selling XRP primarily benefits Ripple as a corporation, while a buyback program would reduce circulating supply and potentially boost the token's price, aligning corporate profits with holder returns. Although Ripple has been buying XRP in secondary markets since 2020 to support its On-Demand Liquidity (ODL) business, Hoskinson stressed that these purchases are mainly for liquidity maintenance, not for direct value distribution to holders. A dedicated buyback plan, he insisted, would create a stronger link between Ripple's business success and XRP's market performance.
Criticism of Initial Allocation and Governance
Hoskinson also took issue with XRP's initial token distribution, which he believes was designed to give Ripple excessive corporate control. He compared the situation to that of Block.One and the EOS project, emphasizing a lack of fiduciary duty to token holders. In his view, crypto projects should prioritize the interests of those who hold the tokens, rather than solely serving company shareholders.
The criticism comes amid evolving U.S. regulations, such as the CLARITY Act, which could provide clearer legal frameworks for assets like XRP and ADA. Market data shows slight declines for both XRP and ADA, down 0.81% and 0.31% respectively, as of the time of writing, indicating that the market's immediate reaction to Hoskinson's remarks has been muted.
Ripple has not yet responded officially to the buyback proposal. The company has previously stated that its XRP purchases are intended to support liquidity for ODL services, not as a price support mechanism. If Hoskinson's suggestion were adopted, Ripple would need to revise its financial strategy, potentially impacting its business model.
The debate, ignited by a prominent industry founder, once again highlights the tension between corporate interests and token holder rights in cryptocurrency economics. Whether or not Ripple decides to implement a buyback, Hoskinson's critique has injected new perspective into the market dialogue.