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David Schwartz, Ripple’s CTO Emeritus (A CTO Emeritus is a former CTO who has attained an honorary position in the company due to his contributions), has provided evidence that Ripple burning all its escrowed $XRP tokens would have no positive impact on the asset’s price.
Ripple has sold over 21 billion $XRP tokens since it began its escrow release schedule in 2017, triggering criticisms from detractors and some proponents. However, Ripple’s CTO Emeritus suggests one of the proposed solutions, involving an outright burn, may not have any positive economic impact.
Key Points
- After receiving 80 billion $XRP tokens from the XRPL architects, Ripple locked up 55 billion tokens in escrow in 2017 and has sold 21.4 billion since then.
- These sales, which often involve about 200 million $XRP from escrow monthly, have raised concerns, leading to criticisms.
- Some of these critics have argued that Ripple could burn all escrowed tokens to trigger a bump in $XRP’s price.
- Amid these suggestions, Ripple’s former CTO and CTO Emeritus David Schwartz has come up to debunk claims that such burns could positively impact $XRP’s price.
- He cited Stellar’s earlier burn of half its supply, exactly 55 billion tokens, in 2019 as evidence that such events would not trigger the expected price rally.
Ripple’s Consistent $XRP Sales
Schwartz made his recent comments in a post on X amid concerns surrounding Ripple’s sales. For context, of the 55 billion the firm locked up in 2017, on-chain data from XRPScan confirms that there are about 33.6 billion tokens remaining. This indicates that the firm has sold off 21.4 billion $XRP from escrow since 2017.
Notably, Ripple scheduled the escrow to release 1 billion $XRP each month, but the firm only leverages around 200 million tokens, locking back up the leftover. While Ripple took this approach to limit its ability to sell $XRP in large quantities, minimizing a market impact, criticisms have emerged, with some arguing that Ripple “dumps on retail.”
Burning the $XRP Escrow May Not Have an Impact on Price
Some individuals have suggested that Ripple burns the tokens instead, insisting that this could have a positive impact on $XRP price rather than exerting selling pressure. One anonymous $XRP community member recently suggested this, suggesting that such an event could push $XRP beyond its current price of $1.39.
The post tagged multiple Ripple executives, but only Schwartz responded with clarification. The Ripple CTO Emeritus shared a chart comparison involving $XRP and Stellar ($XLM) from January 2019 to March 2020. He then asked the $XRP proponent to try identifying when Stellar burned half of its total supply on the chart.
$XRP and $XLM Price Comparison Since Nov 2019
For context, the Stellar Development Foundation (SDF) announced burning 55 billion $XLM tokens, amounting to half of $XLM’s total supply, in November 2019. At the time, $XLM changed hands at $0.065. In comparison, $XRP traded for $0.295.
Interestingly, despite the burn, $XLM, which has always trailed $XRP’s price action, continued to do so, seeing no significant gains. Specifically, a month after the burn, $XLM dropped to $0.045, a 30% collapse. Meanwhile, $XRP crashed by 34% to $0.19. Today, $XLM trades for $0.164, up 152% from the price during the burn, while $XRP sits at $1.39, recording a 371% rise within the same timeframe.
This indicates that while $XLM burned half of its supply in November 2019, and Ripple has sold billions of $XRP on the market since that time, $XRP has effectively outperformed $XLM within this period. Schwartz has leveraged this price performance to confirm why burning Ripple’s $XRP tokens may just be a waste of money, serving no economic purpose.