Over 11 million XRP tokens have been burned since the XRP Ledger’s (XRPL) debut.
In contrast to other assets, however, the community hasn’t paid much attention to XRP burns.
There are differing views on whether the existing burn process can significantly increase XRP’s value in the future.
The network has burned 11.04 million XRP, according to data from XRPSCAN, the XRP Ledger explorer.
This sum has amassed due to an unpredictable burn rate that eliminates XRP fractions after each ledger closure.
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XRP Burn Mechanism
Instead of being used only to support the asset’s price, the XRP burn mechanism also serves the unique aim of combating spam transactions.
A network or project’s community will frequently use burn mechanisms to create a deflationary pattern for an asset.
A decrease in the asset’s supply might support price movement.
To do this, the network levies a transaction fee for each XRP transaction and then burns its received fees.
Despite this, the network is designed to burn less XRP as the asset’s value rises.
This was confirmed in a tweet earlier this month by Ripple’s CTO, David Schwartz.
Effect of the Burn Mechanism
Schwartz said he anticipates the XRP supply to be expended only partially in response to a query about how long it would take to burn the maximum quantity of 100 billion XRP.
He underlined that the value of XRP rises as the supply falls, but the burn rate decreases as a result.
According to official information on the XRP Ledger website, it would require at least 70,000 years to burn up all of the tokens in circulation completely.
Additionally, the documentation mentions that this burn mechanism makes XRP “slightly deflationary.” A deflationary asset is one whose supply is constrained or declines over time.
What Does This Mean for XRP?
Although the original purpose of XRP burns was to prevent spam transactions, the mechanism also turns XRP into a deflationary asset because no new tokens can be minted.
As a result, some supporters contend that the burn mechanism should inherently support XRP’s value.
The creator of the “24HrsCrypto” YouTube channel is a proponent of this viewpoint.
He previously forecasted that the XRP burn rate might increase to 10,000 tokens daily when volume increases.
While some contend that XRP burns could stabilize the asset’s value, others think the present burn rate might not succeed.
Instead, many supporters highlight the utility of XRP as a critical component influencing its price movement.
As the burn rate rises, it is yet to be seen how big of an effect an increased XRP volume would have.
The current XRP price is $0.458414 with a $1,623,590,204 24-hour trading volume. In the previous day, XRP has decreased by 2.88%.