XRP has experienced a slight increase in burn volume, seemingly fueled by rising curiosity surrounding the Xahau Network sidechain. While the XRP Ledger (XRPL) already boasts a built-in burn mechanism, the launch of Xahau has added a new ingredient to the equation.
Created by XRPL Labs, a development team that works on projects for XRPL, Xahau Network is a sidechain offering the allure of smart contracts via the innovative Hooks protocol. However, accessing its wide range of possibilities comes with a cost. Users must burn their XRP to mint the equivalent in XAH tokens, effectively fueling the fire of the burn mechanism.
While initial adoption of this XAH-for-XRP swap remained low, a recent Xumm wallet update, which rebranded it as the Xaman wallet, has caused a surge in the community. This update grants users the sleek ability to seamlessly navigate between the XRPL and Xahau, with their existing r-address.
The impact of this convenience provided by Xaman is evident in the rising number of XRP burns shown on XRPScan. Since mid-December, the data paint a clear picture of an accelerating trend.
Between December 18 and 20, daily XRP burns rose from below 3,000 XRP to over 5,000 XRP. This ascent resumed on December 28 and carried on to January 2, where burns crossed 10,000 XRP.
While regular XRP transfers contribute a steady stream to the token burns, the recent uptick undoubtedly carries the fingerprints of Xahau’s growing adoption.
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What’s Next for XRP?
The question on the minds of many now is where these burns will lead. Can the increased token burn rate reshape the XRP price landscape, and push the beloved token up?
Proponents of this theory point to the deflationary potential of the burn mechanism, arguing that each burned token gets removed from circulation, theoretically tightening supply and potentially pushing the price upwards. However, cautious voices temper this enthusiasm, citing the relatively low number of XRP currently being burned.
Over its lifetime, the burn mechanism has only destroyed 11.8 million XRP, translating to a mere $6.8 million. This amount is nothing compared to XRP’s total supply.
Ripple Chief Technology Officer (CTO) David Schwartz recently shared his belief that the mod of burning XRP to mint XAH can increase demand for XRP. If XRPL can improve token burns, the burns, and the increased demand could help push XRP’s price up.
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