David Schwartz, the Chief Technology Officer (CTO) of Ripple Labs, has recently dismissed the idea that introducing a burning schedule will improve XRP’s value. The tweet came amid a series of tweets from members of the XRP community regarding the asset’s price performance and escrow policy.
How It Began
A crypto researcher with the X handle Darkhorse shared a video and comments suggesting that Ripple’s escrow policy affects XRP’s value from seeing “a new price discovery point.”
Thank you for sharing your thoughts. The potential return of bots and Ripple’s past practices raise valid concerns about transparency.
While monthly escrow releases are routine for holders, the method of dispersion remains a topic of ongoing discussion.Has Ripple ever…
— ĐΛRKHØRSΞ™ (@DarkhorseDNME4) February 19, 2024
Ripple’s XRP has a total supply of 100 billion, with a circulating supply of approximately 54.5 billion tokens. The escrow policy is the blockchain’s pathway towards bringing more XRP into circulation and offloading Ripple’s large XRP holdings. An initial 55 billion XRP tokens were locked in several escrows on an XRP wallet. The mechanism entails that one billion XRP will be released monthly for 55 months.
Admittedly, the team behind the blockchain skipped some months and released less than the expected one billion mark in other cases. The company added that the remaining XRP tokens that do not enter circulation go back to a separate escrow.
Ripple’s latest quarterly market report shows that approximately 40.7 billion XRP remains in escrow lockup and is expected to be released over the next 42 months, around early 2027.
With XRP being an inflationary token, Darkhorse argues that the frequent XRP release from escrow lockup is causing a lag in the asset’s price performance. Although he explicitly stated that Ripple’s actions are not a way of manipulating the price, another crypto figure stressed that Ripple controls XRP’s price.
Ripple CTO Turns Down Token Burns
When a crypto user suggested that Ripple adopt a burning mechanism as a transition to being a deflationary token, the Ripple CTO turned down the idea. Token burns entail that the XRP token burns a portion of its supply by sending it to a burn address, thereby removing it from the total supply.
Using Stellar blockchain and its XLM cryptocurrency as an example, Schwartz explained that XLM’s burn schedules have had no significant impact on its value.
If you’re thinking that will have some positive impact on the price, I don’t think there’s any reason to believe that. Stellar’s burn had no real effect and XRP’s price tracked XLM’s through their burn. So what would the benefit of doing that be?
— David “JoelKatz” Schwartz (@JoelKatz) February 19, 2024
According to the price tracking platform CoinStats, XRP currently trades at $0.54, a 2.22% decrease over the last 24 hours.
