With the recent release of the Xahau Whitepaper, members of the XRP community are speculating on how the Xahau and its native token, XRP+, could influence the XRP Ledger (XRPL) and XRP, its native token. Experts are discussing the positive and negative implications of this new development.
The Positive Outlook
Yassin Mobarak, founder of Dizer Capital, provided an analysis highlighting the potential outcomes of the Xahau Ledger. He believes that Xahau is unlikely to challenge the primary value proposition of XRP, particularly in terms of international payment corridors established by Ripple over the past decade.
Read Also: Ripple Unveils 8 Nations Building Central Bank Digital Currencies (CBDCs) on XRP Ledger
Mobarak also emphasized reducing the circulating supply of XRP through the “Burn to Mint” mechanism, where users can burn XRP to obtain XRP+.
However, some experts suggest that the impact of this mechanism may not be significant enough to have a substantial effect on the market. Additionally, Mobarak sees the success of Xahau as a demonstration of decentralization within the XRP Ledger, addressing concerns of centralization that have persisted.
OK, I thought about this whole Xahau/Hooks fork and its impact on the current XRP ledger. Below is my analysis/speculation.
Please note, this is only a humble attempt at a thought experiment on how things might transpire based on what we know today. I could be entirely wrong as…
— Yassin Mobarak 🪝 (@Dizer_YM) August 28, 2023
The Negative Considerations
Mobarak also discussed the potential downsides of the emergence of Xahau. One concern is the impact on XRP liquidity, as the new sidechain gains popularity and draws liquidity away from the original XRP, particularly within the retail sector.
Another concern raised is that the success of Xahau could overshadow the XRP Ledger, leading to increased reliance on Ripple’s involvement for continued success.
The introduction of XRP+ through a one-way burn-to-mint mechanism poses a fundamental shift for the XRP community, as they must choose a chain for their XRP holdings, potentially leading to value accrual exclusive to Xahau.
Read Also: XRP Ledger-Based Palau Stablecoin (PSC) Gets Live Testing: A Game-Changer for Digital Payments
Burning XRP for XRP+ and User Strategies
Daniel Keller, CTO at Eminence, discussed how much XRP should be sacrificed for XRP+. Keller categorized potential users into speculators, curious explorers, and mini liquidity providers or risk-takers. He advised speculators without on-chain activities on Xahau not to burn XRP for XRP+.
For those interested in exploring the chain, he recommended holding an additional 2 XRP+. For mini liquidity providers or risk-takers, Keller advised caution and not to burn more XRP tokens than they can afford to lose, emphasizing the one-way nature of the burn-to-mint mechanism.
Xahau – The burning question (dun dun)
Before you start asking "How many XRP should one burn to get XRP+", it's necessary to look at "Why should one burn XRP for XRP+"
Same as on the XRPL, you are required to have some tokens in your account on Xahau for basic needs such as:
— Daniel 🇮🇲🪝 (@daniel_wwf) August 29, 2023
The introduction of the Xahau and XRP+ token has prompted discussions among experts regarding its potential impact on the XRP Ledger and XRP. While some see positive outcomes, such as a reduced circulating supply and a demonstration of decentralization, concerns exist regarding liquidity shifts and reliance on Ripple.
User strategies for burning XRP for XRP+ vary based on their roles as speculators, explorers, or liquidity providers. As this development unfolds, the XRP community will closely monitor the implications and adapt their strategies accordingly.
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