Prominent crypto exchange Bitrue has refunded its customers’ XRP tokens previously locked for the minting of Xahau token (XAH) following the end of the event.
Notably, the refund of customers’ tokens, announced by Bitrue yesterday on X, indicates that the mint event was not successful amid prevalent concerns regarding the major difference in price between XAH, the native token of the new Xahau sidechain, and XRP.
The Xahau $XAH Mint Event has concluded. At Bitrue, we always prioritize the interests of our users, therefore, we have refunded all locked $XRP to users' accounts.
We sincerely appreciate your participation in this event. If you have any questions, please contact our support… pic.twitter.com/hNrIxqHT5a
— Bitrue (@BitrueOfficial) November 6, 2023
The Burn2Mint Approach
Recall that Xahau, an XRPL-based sidechain seeking to give users an early opportunity to leverage Hooks, recently launched. Per its documentation, market participants can get XAH, the chain’s token, by burning XRP tokens.
The process, dubbed Burn2Mint, is a one-way flight. This means that any market participant that burns their XRP for XAH cannot get back the XRP tokens. In addition, the Xahau team confirmed that the burn to mint ratio will be a 1:1 proportion, suggesting that users get 1 XAH for every 1 XRP they burn.
Concerns emerged regarding the Burn2Mint protocol, as some XRP investors expressed reservations about burning their XRP tokens. Amid these concerns, Ripple CTO David Schwartz endorsed the process, noting that it could drive demand for XRP. Also, Bitrue opened up an avenue to allow its customers to burn XRP for XAH.
Emerging Concerns
The exchange launched a campaign on Oct. 30, prompting users to lock up their XRP tokens and mint XAH. However, more concerns emerged when XAH began trading but had a much lower value than XRP. This would mean that users would be burning XRP to mint a token of less value.
Nonetheless, it is important to note that the Burn2Mint ratio of 1:1 remains intact, as users will always get 1 XAH for 1 XRP. However, while XRP now trades at $0.68 due to its recent uptrend, XAH currently changes hands at $0.21 over three times less than the value of XRP.
The emerging concerns stem from the fact that some market participants might want to convert back their XAH to XRP when XAH trades on exchanges. However, should this occur, the resulting value would be much less than what they initially had.
Customers took to social media to lay complaints. Amid the comments and the reality of the situation, Bitrue decided to suspend the mint event and refund its customers their XRP tokens. Individuals such as Schwartz have noted that they would rather wait and trade XRP for Xahau on exchanges instead of burning.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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