Ripple CTO Caution on Escrow Burning in Community Engagement

Ripple’s CTO, David Schwartz, engaged with the XRP community to address concerns about the company’s XRP strategy. Specifically, there were questions about burning the entire XRP escrow.

XRP Burning Pressures Explored

In a recent discussion on X, Ripple CTO David Schwartz responded to community worries, especially those raised by “GPDBurnTheEscrow,” about the monthly XRP releases. He explained that Ripple could either maintain or actively reduce its XRP holdings, with the original plan being a swift decrease in the XRP bag.

I can’t think of any set of events that would lead that to happen that’s even remotely probable. I also don’t think it would have any real benefits.
— David “JoelKatz” Schwartz (@JoelKatz) January 8, 2024

Despite community suggestions about burning the escrow, Schwartz expressed scepticism about its practical benefits. This led to a broader discussion about the potential challenges for XRP holders until the escrow diminishes.

Earlier Legal expert and pro-XRP enthusiast Bill Morgan stepped in to address concerns surrounding Ripple’s $238M XRP sales in December 2023. He starts by challenging what he calls a “false narrative”, suggesting that Ripple is dumping a lot of XRP.

Stellar Case Comparison

Further, addressing concerns about potential challenges for XRP holders until the escrow is depleted, Schwartz referred to the Stellar case in 2018. Stellar burned 55 billion tokens ($5.5 billion) to address concerns about its extensive supply.

In 2018, lots of people argued that a reduction in supply could not lower the market cap and so price would have to go up significantly. The Stellar burn proved that to be nonsense. I wouldn’t assume the economics work some particular way without really thinking about it first.
— David “JoelKatz” Schwartz (@JoelKatz) January 8, 2024

However, Schwartz argued that the burn did not significantly impact XLM’s price, highlighting that the narrative of burns boosting prices was “nonsense.”

Considering legal constraints, Schwartz didn’t provide a detailed analysis. He encouraged the community to explore XRP tokenomics creatively. Despite the engagement, a sense of pessimism lingered within the XRP community, reflecting concerns about Ripple’s XRP management.

Schwartz’s Market Insights

Concluding the discussion, Schwartz shared two fundamental beliefs: the rationality of prices, already factoring in expectations, and the market’s potential negative view of radical changes that lack clear benefits.

Schwartz’s engagement provided valuable insights into Ripple’s strategic considerations and prompted a broader dialogue about the future trajectory of XRP.

Source: https://coinpedia.org/news/ripple-cto-engages-with-xrp-community-cautions-against-escrow-burning/