The Chief Technology Officer (CTO) at Ripple recently shared the only effective way the company could burn the over 40 billion XRP it holds in escrow amid persistent community calls.
David Schwartz, one of the original architects of the XRP Ledger and Ripple’s CTO, disclosed this while addressing questions on the prospect of Ripple burning its escrow wallet. Notably, some community members have consistently pushed for this to happen.
Growing Concerns
Concerns about XRP price suppression due to the escrow releases and Ripple’s sales have dominated the scene. Though Schwartz and others have debunked these claims, several community members have pushed the escrow to be burned.
Nonetheless, Cryptopia, an XRP community figure, recently claimed that Ripple would not be willing to burn the tokens in escrow because they allegedly allocated the assets to multiple institutions globally.
He cited a previous comment from Schwartz, in which the Ripple CTO emphasized that burning half the XLM supply in November 2019 had no positive impact on price but only reduced the Stellar Foundation’s valuable resources. Cryptopia said Ripple would also lose resources by burning XRP.
In response, an XRP proponent argued that Ripple had not burned the escrow because of its fear of losing valuable resources but because it was technically impossible to carry out the burn.
He stressed that the tokens are already cryptographically locked in the escrow accounts, set to be periodically released on a monthly basis. Recall that the escrow unlocks 1 billion XRP every month. As a result, Ripple has no access to the tokens until they are released.
Only Way Ripple Could Burn Its Escrowed XRP
Responding to the arguments, Schwartz confirmed that the only avenue through which Ripple could burn the escrow is by turning the account set to receive the funds into a black hole, this rendering it inaccessible to anyone, including Ripple.
Ripple could unilaterally create the same effect as burning an escrow by provably blackholing the account the escrow completes into. Similarly, Ripple could unilaterally create the same effect as selling an escrow by transfering control of the account the escrow completes into.
— David "JoelKatz" Schwartz (@JoelKatz) February 19, 2024
Notably, by doing this, the company could take out one billion XRP each month as the escrow unlocks the tokens to the blackholed address. This move would essentially keep the assets from going into circulation.
Meanwhile, in a previous remark last month, Mayhuka Vadari, a software engineer at RippleX, revealed that the XRP Ledger itself could burn the XRP in an escrow if validators voted in favor of an amendment to do that. However, Vadari stressed that the owner of the escrow, in this case Ripple, cannot burn the escrow.
The network itself can "burn" the XRP in an escrow with an amendment at any time (not that this is likely to pass…). The escrow owner can't burn the XRP while it's in an escrow.
P.S. I don't think hooks can touch funds in an escrow either.
— Mayukha Vadari (@msvadari) January 23, 2024
Interestingly, Schwartz made a similar disclosure earlier while responding to community queries within the same X thread. When asked in December 2020 if Ripple would burn the escrowed XRP should validators and the community demand it, the Ripple CTO said the company would have no choice but to comply.
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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