11M+ XRP Burned so Far, As XRP Remains Deflationary

Despite receiving less attention from the community, XRP burns have successfully taken over 11 million tokens out of supply, but just how effective are these burns?

The XRP Ledger (XRPL) has seen over 11 million XRP tokens burned since its launch. However, compared to other assets, XRP burns have received little attention, and opinions are divided on whether the current burn mechanism can substantially boost XRP’s value in the future.

Data from XRPSCAN, the XRP Ledger explorer, shows that the network has burned 11.04 million XRP to date. This amount has been accumulated through an erratic burn rate that destroys fractions of XRP after each ledger closure.

Burn mechanisms are often implemented by a network or a project’s community to induce a deflationary pattern for an asset. This is because a decrease in the supply of the asset can bolster its price movement.

However, the XRP burn mechanism has a distinct purpose, which is to tackle spam transactions rather than specifically to support the asset’s price. To achieve this, the network charges a transaction fee for every XRP transaction and subsequently burns the fees collected.

Nevertheless, the network is engineered to reduce the amount of XRP burned as the asset’s value increases. David Schwartz, CTO at Ripple, confirmed this in a tweet this month.

In response to a question about how long it would take to burn the maximum supply of 100 billion XRP, Schwartz stated that he does not expect the XRP supply ever to be fully exhausted. He emphasized that as the supply decreases, the value of XRP increases, but the burn rate will decrease accordingly.

I don't think that would ever happen for two reasons:
1) Decreasing supply tends to cause increasing value with decreases the rate of burn.
2) While it's not easy to change core rules, it's hard to imagine the community not doing so if the system was actually breaking.

— David "JoelKatz" Schwartz (@JoelKatz) April 8, 2023

Moreover, official documentation available on the XRP Ledger website states that at the current burn rate, it would take a minimum of 70,000 years to destroy all existing XRP tokens. The documentation also notes that this burn mechanism makes XRP “slightly deflationary.” A deflationary asset is an asset whose supply reduces over time or is limited.

XRP Remains a Deflationary Asset

Although XRP burns initially aimed to combat spam transactions, the mechanism also makes XRP a deflationary asset, given that no new tokens can be minted. This has led some proponents to argue that the burn mechanism should naturally provide support for the value of XRP.

A supporter of this view is the host of the “24HrsCrypto” YouTube channel. He recently predicted that the XRP burn rate might rise to 10,000 tokens per day as volume expands.

36 days ago, #XRP's total supply was 99,989,062,491 ??today the total supply is 99,988,964,530.897995 (97,961 XRP burned and gone forever in 36 days) about 2800 a day – which goes perfectly with the below 24HR burn rate. That number will change to 5k, then 7K per 24HRS as the… https://t.co/NbOQWRPTMM

— ??????????? (@24hrscrypto1) April 24, 2023

While some argue that XRP burns may support the asset’s price, others believe the current burn rate may not achieve this. Instead, many proponents point to XRP’s utility as a major factor driving its price action.

It remains to be seen how much of an impact an increased XRP volume would make as the burn rate increases. Meanwhile, XRP is trading for $0.46, down 1.21% in the past 24 hours.