XRPL Labs’ Commitment to XAH Lock-Up: Ensuring Predictable Supply and Market Integrity with a Treasury Hook

This Hook, carefully developed and reviewed by our team and governance participants, enables a controlled monthly unlock of up to 2 million XAH, overcoming traditional Escrow limitations and showcasing the power of Hooks.

The open-source code for this Hook is available for community review, underscoring our dedication to transparency and allowing us to focus on meeting key ecosystem milestones.

Why a Lock-Up?

The primary reason behind this lock-up is to ensure a predictable supply and to lead by example, showcasing that XRPL Labs is fully committed to the long-term success of its efforts on both Xahau and the XRP Ledger. 

We’re taking the lead and showing that we have no intention of undermining the confidence in the ecosystem’s growth.

Traditional Escrow Won’t Work: Enter Hooks 

You might wonder why we're not using the standard Escrow feature for our lock-up. While traditional Escrow is useful, it doesn't suit our needs because it removes the balance from the account's root balance. 

So, we've opted for a custom solution that is possible only thanks to Xahau's technology: a Hook specially designed to manage the Treasury account.

The Treasury Hook is open-source, explore it here: https://github.com/Xahau/TreasuryHook

Here's how it works:

1. Custom Hook Management: The Hook controls the Treasury account, allowing one controlled unlock of XAH per set period (one month).
2. Community Transparency: The Hook is open-source, so the community can review and fully trust the code that manages these crucial functions.
3. Review: Developed in-house at XRPL Labs, the Hook has been reviewed by Richard Holland and other XRPL Labs members to ensure its reliability.

By using this Hook, we address the limitations of traditional Escrow and demonstrate the power and flexibility of Hooks technology within the ecosystem.

The Treasury and Governance Accounts

Here’s how the system will work:

1. Treasury Account: The Treasury account is where the majority of the locked XAH will reside. It is controlled by the custom Hook, which allows one controlled unlock per set period (XRPL Labs is opting for approximately one month). The unlocked amount will be transferred to the XRPL Labs master account, with a maximum of two million XAH per month.

Important to note that the Treasury Hooks are set once and for all—there’s no going back.

2. Governance Account: This account will continue to receive the regular inflation of XAH, which can be used for our ongoing projects and developments. The governance account will forward a portion of the funds to the Treasury account.

The Treasury account will still be eligible for balance adjustment claims, but these will be automatically forwarded to the governance account to support ongoing initiatives.

How Does the Lock-Up Work?

The Hook controlling the Treasury account has strict parameters:

• Max Unlock: Only one XAH transaction can be unlocked to the governance account per month.
• Inflation and Claims: The inflation received by the governance account and the adjustment claims forwarded from the Treasury account.
• Adjustable Flow: If more XAH is needed for specific incentives, such as grants, additional XAH can be unlocked as part of the monthly limit. If less is needed, the governance account can return unused XAH to the Treasury account, following the same lock-up logic.

Security and Transparency: The Treasury account is designed to perform only two functions: an adjustment claim or the once-per-period unlock to the governance account. The Hook itself is locked, ensuring that once in effect, no changes can be made to the logic.

Predictable Supply

This system results in a predictable supply, reducing free-flowing tokens and creating a stable and healthy environment for all participants. By keeping the supply predictable and transparent, we aim to instill confidence in the market that the availability of native network assets won’t be subject to sudden, unexpected changes in supply.

XRPL Labs is committed to locking up 125mm XAH at the start with a monthly unlock set at a maximum of 2mm XAH.

Accountability Dashboard

We are launching an Accountability Dashboard to further strengthen our commitment to transparency. This live dashboard will allow the community to:

• View the unlock period and the maximum unlock amount of XAH.
• Track how much XAH was unlocked during each period (if any).
• See the balance of the Treasury and governance accounts in real-time.

This dashboard will provide full visibility into how XAH is managed and ensure that all market participants have access to the same information.

See the treasury live at: https://xahau-treasury.xrpl-labs.com/

Call to Action for Other Participants

We believe this lock-up approach should become a best practice across the Xahau governance ecosystem. 

We’re encouraging other governance participants to implement similar strategies to ensure stability and predictability in the XAH market. 

We’re testing this system internally, and once the audit is complete, we will announce it formally with the launch of the Accountability Dashboard.

Final Thoughts

By locking up a significant portion of XRPL Labs' XAH and creating a transparent, controlled release mechanism, we are aligning ourselves with the long-term goals of Xahau’s success. 

Our commitment to accountability, transparency, and predictability is essential for building trust in the Xahau ecosystem, and we believe that this lock-up is a crucial step in maintaining that trust.

We’re excited about this journey and look forward to seeing the positive impact of this initiative. Stay tuned for more updates as we roll out the Accountability Dashboard and continue to build the future of Xahau.

We invite you to dive deeper and explore the Hook code yourself. Visit the Xahau GitHub repository at https://github.com/Xahau/TreasuryHook to review the open-source code that powers our Treasury account management.