The post Ripple CTO Reveals Shocking Truth About XRP Burning Mechanism! appeared first on Coinpedia Fintech News
In the ongoing conversation about XRP burning in the XRP community on the X, a user asked What happens when trillions of RLUSD tokens move daily on the XRP Ledger? If XRP is burned when sending RLUSD on the XRP Ledger? Ripple’s CTO, David Schwartz, quickly jumped in to provide a detailed explanation of how XRP’s burning mechanism works and its impact on both XRP and RLUSD.
How XRP Burning Works
David Schwartz explained that XRP’s burning mechanism is a unique feature of the XRP Ledger that helps keep the network secure and efficient. Every time a transaction is made, whether it’s for XRP or RLUSD, a small fee is charged in XRP. This fee is not returned to the system; instead, it is permanently removed, or “burned,” from circulation.
The minimum is set by consensus. But if there's a burst of transaction load beyond what the network can clear, transactions are prioritized based on fees.
— David "JoelKatz" Schwartz (@JoelKatz) December 13, 2024
While the amount burned per transaction is very small typically around 0.00001 XRP, still the process will help reduce the total supply of XRP over time.
Schwartz said that the amount of XRP burned will likely remain small, even as transaction volumes increase. He pointed out that even if systems like SWIFT, Visa, and Mastercard—which handle billions of transactions each day implemented XRP burning, it would only account for about 0.0075% of the total supply of XRP each year.
How Fees Work on the XRP Ledger
David Schwartz even clarified how transaction fees work. Ripple’s RLUSD, a stablecoin built on the XRP Ledger, also follows the same fee system. Even though RLUSD is a separate asset, its transactions still burn XRP. This means that every time RLUSD is used, XRP’s total supply could decrease, but the impact will be small.
When there’s more activity, the fees can increase slightly, but this ensures that spam transactions are kept out, and important ones move faster.
Ripple’s Plans for RLUSD
In the meantime, Ripple is preparing to launch RLUSD soon, and it could play a significant role in the stablecoins market, which is expected to grow to $2.3 trillion.
Meanwhile, the burning of XRP through RLUSD transactions may not drastically reduce XRP’s supply, but it will still have an ongoing, gradual effect. This, combined with the planned launch of RLUSD and its future use, will likely have long-term implications for the XRP Ledger’s economy.
