The debate of whether or not to burn the more than 40 billion XRP held in escrow by Ripple has continued to wax stronger. As it continues to gain widespread popularity, it has drawn the attention of execs at the crypto firm. Most especially, David Schwartz, who serves as the Chief Technology Officer (CTO) of Ripple. Schwartz has addressed the calls for the escrowed coins to be burned, proposing a way that this could actually be done.
How The 40 Billion XRP Can Be Burned
A debate around the burning of the 40 billion escrowed XRP coins broke out once again on Monday on X (formerly Twitter), where multiple members of the community gave their opinions on whether or not the coins should be burned. The community member who goes by @CryptopianC on X alleged that the reason that Ripple had so far refused to burn the coins was because it had already allocated them to various companies and institutions across the world.
However, another community member countered this stance, saying that the coins had not been burned “because there is no technical means in which to do so.” They further elaborated that such a move would require a change to the protocol itself and this would require all validators to vote in favor of such a change.
The debate waxed stronger as other community members chimed in about how this would actually work. One user explained that the “Escrows can be canceled but only after a specific time in the escrow creation (‘CancelAfter’).”
Responding to this comment, Ripple CTO David Schwartz explained that burning the coins in escrow could be done but not in the traditional sense of “burning” coins. Rather, “Ripple could unilaterally create the same effect as burning an escrow by provably blackholing the account the escrow completes into,” Schwartz said. “Similarly, Ripple could unilaterally create the same effect as selling an escrow by transferring control of the account the escrow completes into.”
The CTO further clarified in another post that “If you define ‘burn the escrow’ to mean ‘ensure that no XRP from the escrow can ever get into circulation’, then Ripple could do that unilaterally by blackholing the account the escrow cancels into.”
What Happens If Ripple Burns The Escrow?
The inflation of the circulating XRP supply due to the scheduled unlocks from the Ripple escrow has always been of concern to the community. While the legal battle with the United States Securities and Exchange Commission (SEC) has been the main driver of XRP’s poor performance in the last three years, the inflation of the available supply has not helped matters.
A total of one billion XRP tokens are released monthly from the Ripple escrow and although the majority of the tokens are usually returned to escrow, around 100-200 million coins are left in circulation. These also go toward servicing Ripple’s On-Demand Liquidity (ODL) service, for which they’ve come to be known.
If Ripple were to ‘burn’ the total coins in the escrow, it would mean 40% of the XRP supply would be eliminated forever. Going by the performance of the likes of Shiba Inu after 40% of the supply was burned, this could end up being a positive catalyst for the coin.