Many have previously debated the deflationary nature of the #XRP #cryptocurrency . The former is supported by evidence supplied by pro-XRP crypto researcher Panos Mekras, who claims the cryptocurrency exhibits deflationary traits.
Total Tokens Destroyed
Mekras tweeted a link to a tweet indicating that over 11 million tokens had been burnt on his X (formerly Twitter) network. Since the token's total supply has reduced over time owing to the burn mechanism, this metric strongly shows that the token is deflationary.
However, another X user (@hasen_van) stated that the token was only deflationary with "respect to all XRP in existence" and that it will remain inflationary as long "as Ripple keeps on selling into the open market."
accurate with regards to all XRP in existence, however from a holder's perspective, XRP is inflationary as long as ripple keeps selling into the open market because most exchanges use circulating supply (x price) to estimate market cap. #fridayfacts
On October 6, 2023, — VanHasen (@hasen_van)
To counter the misconception that some $XRP tokens are not yet "in existence," Mekras clarified that the entire 100 billion XRP supply has been around since "day 1," meaning that all of the tokens have been in circulation from the start.
The existence of an escrow system in #Ripple appears to be at the heart of the controversy. Thus, some (like as VanHansen) think that escrow-locked XRP is not included as part of the circulating quantity, and that the escrow system has an impact on XRP's deflationary condition. But some, like Mekras, say that even with the escrow system in place, the token's deflationary nature remains unchanged.
According to VanHansen, the coin can't be deflationary (unless technically) since the XRP supply is increased whenever "Ripple releases XRP from the escrow." Mekras stuck to the literal meaning of "deflationary," but VanHansen was attempting to put it in a broader perspective.
Does XRP Cause Deflation, or Not?
While other networks may include a built-in method to reduce the overall quantity of tokens, the XRP Ledger does not. In the case of Ethereum, the London hard fork created a fee-burning mechanism in which a small amount of Ether was destroyed very instantly after a transaction was processed.
Token burns have happened on the XRP network, although in this case it was just a coincidence and not a deflationary strategy. A Ripple programmer indicated in July that the massive spike in the burn rate was caused by the termination of XRPL accounts. He added that when an account is deactivated, two XRP are often burnt.
He also mentioned that over 100,000 XRP were destroyed when 85,556 inactive Ledger accounts were removed in June. As a result, the total number of burnt tokens increases whenever an account is removed.
