Flare Networks has completed its long-awaited airdrop of Spark (FLR) tokens—benefitting anyone who currently owns XRP.
But unfortunately for the world’s third-largest cryptocurrency, the Dec. 12 event proved to be a big drag on XRP, taking it down about 9% from its price of $0.55 the day before.
In November, XRP enjoyed a dramatic surge in the space of a week—up 250% to close at highs of $0.69 on Nov. 24. Considering that XRP doesn’t exactly have a reputation for being an altcoin that enjoys triple-digit price gains, this was significant.
Although prices have cooled in recent days, they had largely stayed resilient. But since the airdrop, which was supported by major exchanges including Coinbase (after months of uncertainty), XRP has declined substantially—giving it by far the worst performance of the top 20 cryptocurrencies by market capitalization over the past seven days.
At the time of writing, XRP has stabilized at about $0.50, down 27.5% from its Nov. 24 high and more than 16% over the past seven days, according to CoinMarketCap.
That said, the price is still nearly twice what it was in mid-November, when it started ascending. And XRP has retained the No. 3 by market cap position it took back from stablecoin Tether during its recent run up.
With the number of XRP addresses increasingly substantially in the run up to Dec. 12—with 51,000 new accounts created in the space of just three days—it seems many people are now selling up.
What is Spark?
Spark is the token that’ll run on the Flare Network, a blockchain that’s yet to launch. The decentralized network aims to bring “full smart contract utility to the XRP ecosystem”—and the team explained over the summer: “Spark is created through what may be the first ever utility fork whereby the origin network, in this case the XRP Ledger, benefits through increased utility.”
The project is aiming to create a crucial point of difference from Eth 2.0, which will run on a proof-of-stake network once the long-awaited—and still fairly far off—upgrade is complete. Whereas the security of Ethereum’s blockchain will eventually hinge upon the validators who have staked ETH, Flare says Spark won’t have a role in securing the network. If anything, the main reason it exists is to prevent spam attacks. Over time, it’s hoped this will help Ripple become a compelling rival to developers who wish to launch decentralized finance protocols and decentralized apps.
A total of 100 billion Spark tokens have been created, and 45 billion of them have been up for grabs among existing XRP holders, with the exception of Ripple Labs. Spark tokens are being distributed on a 1:1 basis, meaning that crypto enthusiasts will receive one Spark token for every XRP they own.
Americans who own XRP have been warned that receiving these airdropped tokens will be subject to tax—and this will be based on how much the cryptocurrency is worth when you gain control of it, rather than when you receive it. The IRS has ramped up its guidance on airdrops in specific years, and has been pursuing crypto investors with rigor in recent years.