XRP burn in stablecoin RLUSD trading, Ripple CTO's view

## About XRP Burn

Regarding XRP Ledger, with the launch of the stablecoin RLUSD, many cryptocurrencies (virtual currencies) XRP Burning (incineration) of XRP is attracting attention. Incineration is a mechanism by which XRP is permanently removed from circulation.

The burn amount per transaction is very small, usually around 0.00001 XRP. However, this process is believed to play a crucial role in supporting the stability of the network. With this design, the network is protected from spam and fraudulent transactions while ensuring legitimate usage.

The XRP Ledger’s fee system is designed to be flexible and maintain low fees during normal times. However, fees may increase when network usage increases. This mechanism ensures that transactions are processed based on priority, allowing transactions that paid higher fees to be processed quickly.

David Schwartz, CTO of Ripple, explains in detail the mechanism of this transaction fee. According to him, the minimum level of fees is determined by the consensus of the network, but if the transaction volume exceeds the processing capacity of the network, transactions are prioritized based on fees.

Source: X

RLUSD operates on similar rules. Although this stablecoin is classified as a separate asset, it requires XRP fees to be processed on the same XRP ledger. This mechanism results in the burning of XRP regardless of which asset is being traded.

The scale of this burn mechanism is compared to global payment networks such as SWIFT, Visa, and Mastercard. These networks process over 10 billion transactions per day, but even if the same scale of transactions were conducted on the XRP Ledger, the amount of XRP burned annually would only be about 0.0075% of the total supply. Therefore, the impact of the XRP burn mechanism on the long-term supply is expected to be limited.

Related: What is XRP? Explaining the Ripple lawsuit and the impact of the SEC’s new system

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