XRP community figure Zach Rector says the long-discussed XRP supply shock is no longer just a meme but starting to materialize. In a recent update, Rector noted that DeFi projects like Flare Network’s FXRP are now locking up massive amounts of XRP. This implies the token’s freely tradable supply is shrinking faster than many realize. Rector disclosed that he recently minted $100 worth of FXRP, on top of $90 minted last week, as part of his experiment with the Flare ecosystem. A previous report from The Crypto Basic confirmed that more than $43 million worth of XRP had already been bridged onto the network to mint FXRP as of October 8. Today, that figure has increased to $56 million at current market rates, representing roughly 20 million FXRP in circulation. $56M XRP is on Flare now. — Hugo Philion ☀️ (@HugoPhilion) October 9, 2025 Notably, the project currently maintains a weekly minting cap of 5 million FXRP, which has been consistently sold out within hours. The first 5 million allocation was fully minted in four hours, and the most recent round reached its cap in just three hours. This highlights the enthusiasm among XRP holders seeking yield opportunities without selling their tokens. Why This Matters for XRP’s Circulating Supply While each FXRP minted represents XRP locked away on the XRP Ledger, analysts argue that this process could significantly reduce the amount of XRP available for trading. Philion revealed that Flare aims to secure up to 5% of XRP’s total supply through its FXRP system. This development aligns with widespread community warnings about an impending XRP supply crunch. Earlier, XRP commentator Chad Steingraber suggested that only 21 million XRP, comparable to Bitcoin’s total supply, may eventually remain available for public trading. He highlighted that Axelar’s mXRP aims to manage $10 billion in XRP, while Flare’s FXRP is targeting 5 billion XRP by mid-2026. Combined, the two projects could lock up 8 billion XRP, roughly 13% of the current circulating supply. Shrinking Exchange Balances and Institutional Accumulation The potential supply shock comes amid sharp declines in XRP exchange balances. Coinbase, for instance, saw its XRP reserves plunge by over 96% in less than three months. Meanwhile, institutional interest is accelerating. Asset managers like 3iQ and REX-Osprey already hold millions of XRP via ETFs. Additionally, as many as seven spot XRP ETFs are launching soon. Companies, including VivoPower and Wellgistics, have also announced plans to hold XRP as a reserve asset. The Beginning of the XRP Supply Shock Era According to Rector, this is “just getting started”. As more XRP tokens go into DeFi protocols, institutional funds, and long-term reserves, the liquid supply available for open-market trading could dwindle fast. Interestingly, hypothetical estimates suggest XRP price could soar to four digits if only 21 million tokens are publicly available for trading.