Should Ripple burn 50% of XRP’s supply to pump its price?

By Tim Copeland

A bunch of XRP fans are getting behind a proposal led by a prominent crypto trader that Ripple should burn half the XRP held in its reserves. The logic here is that by reducing the supply, the coin’s price will rise more easily, making a mint for everyone involved.

The petition, started by trader Crypto Bitlord—who has more than 100,000 followers on Twitter—on August 5, has over 300 signatures so far. It recommends that Ripple no longer release its supply of XRP onto the crypto market, suggesting this will lead to a pump, “like the good ol days.”

“Ripple continue [sic] dumping billions of XRP on us, crashing the price!” the petition states, adding, “Sure we know that XRP is a solid coin with major potential but this needs to stop!”

Much of the blame is placed on Ripple’s holdings of XRP—50 percent of its total supply—which it systematically sells into the market to stimulate the growth of the ecosystem. Those moves rapidly increase the supply of XRP, putting downward pressure on the price.

We have contacted Ripple for its response and will update the story accordingly.

The escrow system originally held 55 billion XRP (55 percent of its 100 billion supply), split into 1 billion accounts. Each account is unlocked monthly and some or all of the XRP is sold at Ripple’s discretion. The company recently announced that its sales will continue to be proportionate to the conditions of the market but at a lower rate—in the hope it will safeguard the price of XRP.

But that hasn’t mollified the community.

“Community is finally taking a stand against Ripple dumping or "de-risking" billions of XRP on the community. Lets [sic] wake up and take back what was ours,” one XRP fan tweeted, in favor of the proposal.

The biggest obstacle facing the idea is that Ripple has a lot to gain from selling its massive vault of XRP, currently valued at $15.5 billion, and very little to gain from burning it. While the company and its employees likely have other holdings of XRP, it’ s unlikely that the increase in value of these holdings would counteract the loss of the XRP in escrow.

Also, Ripple’s sales of XRP could well be be positive for the cryptocurrency since it’s intended to stimulate the XRP ecosystem. For example, Ripple’s deal with MoneyGram (though it’s unclear how much, if any, XRP was sold to MoneyGram) resulted in the money transfer business adopting its xRapid service, that uses XRP for cross-border payments. That’s arguably far more valuable for the XRP ecosystem than simply having a smaller supply.

Some traders pointed this out, suggesting that it’s wiser to take a long term view on the escrow system (which won’t be emptied until the end of 2023) because it will help to build up such an ecosystem. One XRP enthusiast said, “The more they sell, the more it is distributed among different hands. The more it is divided, the less [it] is exposed to manipulation.

But for now, Ripple will continue to have its stranglehold on the decentralized cryptocurrency.

Update [August 7, 15:52 UTC] The total supply of XRP has been corrected.

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