XRP Burn Gathers Momentum as More Users Burn XRP for XAH

On-chain data shows a slight uptick in the volume of XRP burns as more users choose to try out the Xahau Network sidechain. 

The XRP Ledger originally has a burn mechanism designed to control spam transactions on the network. However, the amount of coins being burned got a further uptick following the launch of the Xahau Network, on-chain data shows.

Recall that Xahau Network is an XRPL sidechain launched by XRPL Labs. The sidechain network enables smart contracts using the Hooks protocol. Nonetheless, users must burn XRP to mint the equivalent in XAH tokens which they can use on Xahau Network. 

Although the mechanism got little adoption at the time of its initial release, a recent update to the Xaman wallet has seen more users opt to burn XRP for XAH. The update, as covered by The Crypto Basic, enables users to simultaneously switch between the XRPL and Xahau using the same r-address.

Following the update, popular blockchain explorer XRPScan shows that the number of XRP burned has increased since mid December. For example, on December 18, nearly 7000 XRP were burned, a more than 100% increase from the average 3000 XRP burned daily.

Additionally, January 2 saw a new record set for the year, with 10,134 XRP burned. Hence, while 3,000 represents burns from regular XRP transfers, the additional sum largely comes from XRP holders burning coins to mint XAH on the Xahau Network.

Could This Impact the XRP Price?

The latest uptick in XRP burns has caught the eye as many participants are quick to point out its deflationary impact on the XRP supply. However, the low value being burned potentially hinders its ability to impact the XRP price, especially in the short term

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For instance, since the introduction of XRP burns, roughly 11.8 million XRP ($6,800,610) has been burned. The value is only a fraction of XRP’s 99 billion coin supply, meaning only large substantial burns could potentially move the coin’s price.

It remains to be seen if Xahau will attract sufficient users to drive an increase in the volume of XRP coins burned.