Price of XRP crashes following snapshot for Spark airdrop

The snapshot for the upcoming airdrop of Flare’s native token Spark took place at midnight on Saturday

Flare is a distributed network that can be used to create two-way bridges between networks, such as Ethereum and the XRP Ledger (XRPL), a global payment and foreign exchange network. Flare uses the Avalanche consensus mechanism and is the world’s first Turing complete Federated Byzantine Agreement (FBA) network. This basically means that Flare doesn’t rely on economic mechanisms like Proof of Stake (PoS) to maintain network security.

The native token of the Flare network is called Spark (FLR), and can be used to prevent spam attacks, participate in protocol governance, provide data to an on-chain oracle and as collateral within decentralised applications (Dapps).

Flare announced earlier this year that 45 billion Spark tokens would be airdropped to XRP holders, excluding Ripple Labs, at a ratio of approximately 1:1. More than 100 exchanges and wallets are participating in the airdrop, including Binance, Bithumb, Bitfinex, Exodus and Ledger. Coinbase also eventually announced their support a week ago.

The distribution of Spark tokens will be based on XRP balances at the time of the snapshot, which was taken at 00:00 am UTC on 12 December – a date chosen to commemorate the birth of Martha Coston who invented a flare and signalling system, and after whom Flare’s testnet is named.

Following the snapshot, the price of XRP crashed, likely due to many people who had held it just to benefit from the airdrop selling it immediately. Indeed, on-chain analytics platform Santiment tweeted on Friday that the number of XRP addresses holding more than 10 million tokens had risen to an all-time high on the eve of the snapshot.

In the 15 hours following midnight on Saturday, the price of XRP fell by around 15% on Coinbase from $0.5718 to $0.4857. The price has steadied somewhat since and could benefit longer term as Flare’s upcoming utility fork is intended to bring value back to the original chain. Flare will bring smart contracts to XRPL, as well as the feasibility to create a trustless pipeline to other blockchains.

Self-custody XRP holders can still claim Spark up to the deadline of 11 June 2021, after which any unclaimed Spark will be burned. The airdropped tokens will be distributed when the Flare Network goes live, which is expected sometime within the first and second quarter of 2021.