Ripple could be forced to burn all of its XRP holdings if the community decides to vote for it. David Schwartz, the company’s CTO, confirmed this.
David Schwartz, Ripple’s chief technology officer, has admitted that the community could force the company to burn its 48 billion XRP tokens, regardless of whether Ripple agrees with the decision or not.
Ripple currently owns half of the total XRP supply and has come under fire in the past for selling out tokens. In a Twitter thread, Schwartz confirmed that the community could vote for Ripple to burn XRP tokens, saying the blockchain is “very democratic.”
There would be nothing Ripple could do to prevent this.
Changes in the XRP ledger require an 80% approval rate from the ledger’s validators. In June, the validators of the XRPL voted for the adoption of a new amendment, known as the “cheque amendment,” without Ripple’s support.
The change introduces users’ ability to issue checks to each other for a predetermined amount of XRPL that can be redeemed at a later time.
In November last year, Stellar reduced its total coins from 105 billion XLM to 50 billion.
At that time, Schwartz publicly opposed Stellar’s coin burning. When Stellar burns more than 50% of XLM tokens, Schwartz wrote:
Too bad XRP is decentralized or someone could just burn half the supply and raise the price to 29 cents.
– David Schwartz (@JoelKatz) November 8, 2019
How would the XRP Price react if Ripple burns its tokens?
In December 2017, Ripple created 55 Escrows with 1 billion XRP each. One of these 1 billion Escrows would expire every month and return the 1 billion XRP to Ripple. Ripple could then use this XRP or put a certain amount into a new escrow account.
There are Ripple accounts that currently hold 51,794,328,522 XRP, which, according to Adam Riese, means that there are still 48,196,516,786 XRP in the Escrows. Ripple has already sold 6,803,483,214 XRP. But what would happen to the XRP price if Ripple burns its half token supply.
The XRP rate of currently 0.61 would find an equivalent equilibrium at 1.22 dollars.
But it is doubtful that Ripple would ever knock XRP into the trash can for under 14 billion dollars.
Originally published at https://thecryptobasic.com on December 5, 2020.