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Mustafa Mulla
Mustafa Mulla
Author
Mustafa has been writing about Blockchain and crypto since many years. He has previous trading experience and has been working in the Fintech industry since 2017.
- Dec 13, 2024 12:47 UTC
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Ripple CTO Reveals Shocking Truth About XRP Burning Process
Ripple CTO explains XRP burning removes small amounts of XRP per transaction.
Even with billions of transactions, XRP burning affects only 0.0075% of the total supply annually.
Ripple’s upcoming RLUSD stablecoins launch may impact XRP Ledger’s economy.
The XRP community on X (formerly Twitter) has been actively discussing the burning mechanism of XRP, especially in relation to RLUSD tokens. A user recently asked, “What happens when trillions of RLUSD tokens move daily on the XRP Ledger? Does XRP get burned during these transactions?”
Ripple CTO David Schwartz stepped in to clarify how XRP burning works and what it means for both XRP and RLUSD.
What Is XRP Burning, and How Does It Work?
David Schwartz explained that XRP’s burning mechanism is a key feature of the XRP Ledger, designed to keep the network efficient and secure. Each transaction, whether for XRP or RLUSD, incurs a small fee in XRP. Unlike conventional fees that are redistributed, this fee is permanently removed—or “burned”—from circulation.
The amount burned per transaction is tiny, typically around 0.00001 XRP, but over time, these small burns reduce the total supply of XRP.
How Much XRP Is Burned Over Time?
Schwartz pointed out that even with a significant increase in transactions, the impact on XRP’s total supply remains minimal. For instance, if payment systems like SWIFT, Visa, and Mastercard adopted XRP for billions of transactions daily, the annual burn would account for just 0.0075% of XRP’s supply.
This highlights that while XRP burning gradually reduces the supply, it doesn’t lead to drastic changes in the short term.
RLUSD Transactions Also Burn XRP
Ripple’s RLUSD, a stablecoin built on the XRP Ledger, follows the same fee-burning system. Although RLUSD is a separate asset, every RLUSD transaction also results in a small amount of XRP being burned. This means that increased use of RLUSD could lead to a gradual decrease in XRP’s total supply.
However, Schwartz emphasized that the effect on XRP’s supply remains modest, even with high transaction volumes. Importantly, this mechanism helps the network stay efficient by discouraging spam transactions and ensuring faster processing of critical ones.
Future of XRPL
Ripple is preparing to launch RLUSD, which could play a key role in the growing stablecoin market, expected to reach $2.3 trillion. While RLUSD transactions will contribute to XRP burning, the overall impact on supply will be small yet consistent.
The combination of XRP burning and RLUSD adoption is expected to have long-term effects on the XRP Ledger’s economy.
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