Debunking Myths: XRP’s Deflationary Nature Gains Momentum

In recent times, the cryptocurrency community has witnessed considerable debate regarding the inherent characteristics of the XRP token. Is it deflationary? Contributing to this discourse, crypto enthusiast Panos Mekras took the lead by presenting data that strongly hints at XRP’s deflationary nature.

Torching Token Numbers

Panos Mekras took to the X platform, formerly known as Twitter, and pointed to a revealing tweet. The message highlighted the burning of over 11 million tokens. The decreasing total supply over time due to this burn mechanism lends weight to the deflationary claim.

However, every coin has two sides. Another X platform user, @hasen_van, introduced a perspective, claiming XRP is only deflationary concerning its total existence. The user emphasized that as long as Ripple continues its selling spree in the open market, the token’s inflationary aspect remains.

A Deep Dive into the Debate

Mekras, ever keen on clarity, pointed out that XRP’s total supply of 100 billion tokens has always been there from the outset. This indicates that its entire supply has been in circulation since inception, thus no token can be labeled as ‘yet to exist’.

At the heart of this discussion lies Ripple’s escrow system. Some individuals, like VanHansen, are of the opinion that XRP in escrow doesn’t count towards its circulating supply, impacting its perceived deflationary status. However, Mekras counters this by emphasizing that the escrow system doesn’t strip XRP of its deflationary essence.

Venturing further, VanHansen stated that unless looked at technically, the token can’t be deflationary. He highlighted that every time Ripple releases XRP from the escrow, it inherently inflates the circulating supply. While both parties hold their ground, Mekras sticks to the textbook definition of deflationary, whereas VanHansen seeks to add a contextual layer.

Decoding XRP’s Nature

One critical distinction to draw here is that, unlike networks like Ethereum which introduced the fee-burning mechanism post the London hard fork, the XRP Ledger doesn’t inherently aim to reduce the token’s total supply.

A revelation in July brought a new dimension to this discussion. A Ripple engineer noted that the surge in burn rates was predominantly due to account deletions on the XRPL. Each account deletion results in a 2 XRP burn. A massive 85,556 old accounts were deleted in June alone, leading to a burn of over 100,000 XRP. Thus, as accounts get deleted, the burn figures consistently rise.

In conclusion, while the debate around XRP’s deflationary nature continues, it’s evident that there’s more to the story than meets the eye. The discussions enrich the crypto community’s understanding and pave the way for further research and exploration.