Will XRP Burn Guarantee Price Gains? Ripple CTO Emeritus Draws XLM Parallel

In a recent X discussion, Ripple CTO Emeritus David Schwartz addresses speculation on the impact of a large XRP burn on its price.

The conversation started when an X user criticized the recent Ripple share buyback plan, asking to do something that benefits XRP holders. Ripple has kicked off a share buyback that would value the company at $50 billion, with plans to buy back up to $750 million in shares from investors and employees.

The X user had suggested that Ripple burn its XRP escrow, saying it can actually make XRP worth more than its current price of $1.38. For context, total XRP escrowed, according to xrpscan, is over 33.6 million (33,625,688,696) XRP.

XRP has a fixed maximum supply of 100 billion tokens, all of which were pre-mined at its launch in 2012, implying that no new tokens can be created. A total of 33.6 billion XRP in escrow represents about one third of the total XRP maximum supply, so destroying the escrow might imply burning a third of XRP supply. Thus, a burn of the escrow would be gigantic in this context. But despite being gigantic, the potential impact might be minuscule.

Schwartz highlighted this in response to the X user, who suggested the escrow burn, using XLM as an analogy.

XLM 50% supply burn revisited

In November 2019, the Stellar Development Foundation (SDF) burned 55 billion XLM tokens, more than half (or 50%) of the total supply, slashing it from 100 billion to 50 billion XLM. This is even more gigantic in comparison if the XRP escrow (about 33% of supply) were to be burned.

The reason for the ex-Ripple CTO’s analogy is that XRP has always mirrored the XLM price; thus, comparing the impact of a massive burn on the XLM price might be a good way to deduce what might happen if a large XRP burn occurs.

However, the impact of a 50% supply burn on XLM price was not visible, as it continued to mirror the XRP price over the years.

Schwartz presented this deduction in a question he posed to his X followers: “Somewhere on this chart, XLM burned about half its supply. Can you find where?” The chart he referred to was that of XRP and the XLM price, with X users barely able to spot the point at which XLM burned half of its supply.

Another X user suggested March 2019, to which Schwartz responded that this was not even close, as the large burn took place in November of that year.

According to sources at the time, XLM price briefly rose 14% following the large burn. At a current price of $0.16, XLM is down 82.61% from an time high of $0.9381 attained on January 4, 2018.