Ripple's digital asset, XRP, operates on a unique deflationary model with a fixed supply of 100 billion tokens created at launch, making it impossible to mine or increase the total supply. Each transaction on the XRP Ledger permanently destroys 0.00001 XRP, a mechanism embedded in the protocol that cannot be altered or reversed. This results in a consistent reduction in circulating supply, driving long-term scarcity as network activity grows.
As institutional adoption for cross-border payments and decentralized finance (DeFi) increases, higher transaction volumes accelerate the burn rate. For instance, millions of daily transactions could compound supply reduction over time. Ripple's documentation and a 2017 academic study by Aigubov and Magomedtagirov confirm the irreversible nature of this burn, contrasting XRP with inflationary models like Bitcoin and Ethereum, which rely on mining to add new coins.
Researchers, including SMQKE, emphasize that assets with limited and actively used supplies tend to appreciate in value. Growing interest from entities like ONDO and Nasdaq highlights concerns over a potential supply crunch, as ONDO warned the SEC about insufficient XRP availability. This deflationary structure, combined with XRP's utility as a bridge asset for fast settlements, positions it for potential value growth amid expanding real-world use cases.
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