cryptoglobe.com
Data from the XRP Ledger is showing that since inception, over 11 million $XRP tokens have so far been burned. The amount of tokens burned has grown through an inconsistent burn rate that eliminates fractions of XRP following each ledger closure.
According to data from XRP Ledger explorer XRPScan, a total of 11.04 million XRP tokens have so far been burned through this mechanism, although its potential impact on the long-term price of XRP has been questioned.
Burn mechanisms are frequently employed by a network or project’s community to establish a deflationary pattern for an asset, as a decreasing supply can enhance its price trajectory when demand grows.
Nevertheless, the XRP burn mechanism serves a unique purpose: to address spam transactions rather than to bolster the asset’s price directly. To accomplish this, the network imposes a transaction fee on every XRP transaction and subsequently burns the collected fees.
The XRP network is designed to diminish the quantity of XRP burned as the asset’s value grows. Ripple’s CTO, David Schwartz, confirmed this in a tweet earlier this month.
I don't think that would ever happen for two reasons:
— David "JoelKatz" Schwartz (@JoelKatz) April 8, 2023
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.
Schwartz said he does not expect the total supply of 100 billion XRP to ever run out, when asked how long it would take to burn it all. He pointed out that the burn rate will change if the value of XRP goes up when the supply goes down.
Furthermore, official documentation on the XRP Ledger website reveals that at the current burn rate, it would take nearly 70,000 years to obliterate all existing XRP tokens. The documentation also characterizes this burn mechanism as making XRP “slightly deflationary.” A deflationary asset is one whose supply diminishes over time or is capped.
While some maintain that XRP burns could bolster the asset’s price, others believe the current burn rate may be insufficient for this purpose. Instead, numerous advocates highlight XRP’s utility as a primary factor influencing its price movement.
As CrypotGlobe reported, California-based fintech firm Ripple has recently revealed that its global $XRP-powered global proprietary payments solution, RippleNet, has processed nearly $30 billion across approximately 20 million transactions since launch.
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