In a recent development, the XRP community was captivated by influencer WrathofKahneman (WoK) when he provided insights on the impact of XRP burns on the cryptocurrency’s price in the context of XAH minting. With the introduction of Xahau, a chain based on the XRP Ledger, users can mint XAH tokens by burning XRP. This article delves into the details of this intriguing development.
XAH Minting with XRP:
Pro-XRP exchange Bitrue has initiated a seven-day lockup schedule, enabling XRP investors to mint XAH tokens by leveraging their XRP holdings. Participants who burn their XRP during this period will receive an equivalent amount of XAH tokens in return.
Given the increasing popularity of XAH minting, the XRP community has raised questions regarding its potential impact on XRP. Specifically, there is curiosity about the rate at which XRP is being burned when exchanged for XAH tokens through minting. This inquiry stems from the widely held belief that reducing the circulating supply of a token can boost its value.
WoK’s perspective is that burning XRP has a limited effect on its price. He argues that the quantity of XRP burned is so negligible, especially initially, that it exerts minimal influence on its market value.
In his response, WoK explains, “Theoretically, it reduces the supply of XRP and should push the price up. But in reality, it requires so little XRP, especially at first, that I don’t think it does much of anything.”
WoK further emphasized his point by sharing data from XRPScan. According to the snapshot he provided, out of the 99.98 billion XRP tokens, the XRP Ledger has burned approximately 11.7 million of them. It is essential to note that, unlike specific other cryptocurrency projects, the XRP Ledger’s burn mechanism is primarily aimed at mitigating the risks associated with network spam transactions. However, an unintended consequence of this mechanism is the gradual reduction of the XRP supply.
While the XRP community remains intrigued by the dynamics of XRP burns and XAH minting, WoK’s insights suggest that the impact on XRP’s price may be limited due to the relatively small quantity of XRP being burned. This discussion sheds light on a fascinating aspect of the cryptocurrency ecosystem and highlights the XRP Ledger’s unique approach to addressing network challenges while inadvertently affecting supply dynamics.