Ripple CTO and Legal Expert Refute Effectiveness of Burning XRP Escrow

• Ripple CTO David Schwartz and crypto attorney Bill Morgan say that burning XRP would not substantially impact the price of the token.
• The two compared the price trajectories of XRP and XLM and found them almost identical despite the Stellar Foundation burning $4.7 billion worth of XLM years ago.

Would burning part of the XRP supply impact the token’s price and give it the much-needed boost to compete with its peers? The community has been weighing this question over the past few days, with some, like Ripple CTO David Schwartz, falling on the “it would be an exercise in futility” side.

Token burns are common in the crypto world. A burn occurs when a portion of the supply of any token is sent to a ‘dead’ address and lost forever. In essence, this should cut down the circulating supply and, according to the laws of supply and demand, prop up the price.

Some, like Shiba Inu, have hung their hopes on the burns, as Crypto News Flash reported—the meme coin’s community has burned 410 trillion SHIB, which is around 40% of the total supply.

However, the Ripple CTO and a renowned Australian crypto lawyer believe it would be useless for XRP. The discussion started with a chart showing that for the past decade, XRP and XLM have had an “unnaturally symmetrical” price pattern, as shown below.

Crypto lawyer Bill Morgan quickly pointed out that the chart was evidence that interventions by the Stellar Foundation, such as token burns, have been ineffective in boosting XLM’s price. Similarly, if Ripple decided to burn part of the XRP supply, it would not have any effect on its price.

He stated:

I don’t know what causes it but it shows how useless Ripple burning the escrow would be. Stellar burned XLM and Ripple did not burn XRP and it had no impact on the symmetry.

Morgan believes that even the SEC lawsuit has not significantly impacted the price of XRP, contrary to popular belief. As proof, he pointed out that the Stellar Foundation wasn’t sued by any regulatory agency and yet its price has been unable to break past the XRP pattern.

“Factors external to either blockchain and not specific to either Ripple or Stellar must be the explanation,” he believes.

Schwartz concurs. The Ripple CTO stated, “…Stellar burned half its supply, and there wasn’t so much as a blip on its price chart or any real deviation from XRP’s price correlation.”

The one bit that's the most convincing to me is that Stellar burned half their supply and there wasn't so much as a blip on their price chart or any real deviation from XRP's price correlation.https://t.co/x4qF9UuJvF

— David "JoelKatz" Schwartz (@JoelKatz) May 26, 2024

Schwartz was referring to the 2019 event when the Stellar Foundation burned 55 billion XLM tokens, worth $4.7 billion at the time. The Foundation owned 85 billion tokens to fund ecosystem developments, including by issuing grants but decided to burn half of it to boost the price. It didn’t work, as the charts above show.

If the burns and the lawsuits have had zero impact on the price of the two cryptos, then what determines their prices? According to Schwartz, a mysterious force dictates the price and even he doesn’t know what it is. He stated:

I genuinely don’t know [what drives the prices]. The thing that I think is most likely is that both prices are driven primarily by factors completely outside their ecosystems. But there’s some evidence against that view too.

XRP and XLM have been underwhelming performers in this year’s bull run. Year-to-date, XRP has lost 14.3% to currently trade at $0.5296, while XLM has lost 16.5% to trade at $0.1082.