Analysts continue to explore how the impact of a significant reduction in XRP's supply could affect its value. The existing burn mechanism on the XRP Ledger (XRPL) is already in place, but further analysis is needed.
How the Burn Mechanism Works
Every transaction on the XRPL requires a small fee, which is permanently destroyed rather than redistributed. This process was introduced not as a method of creating scarcity, but to discourage spam transactions.
Since the ledger went live more than 13 years ago, just 14.19 million XRP have been burned, representing only about 0.014% of the total maximum supply of 100 billion tokens. At the current burn rate, averaging around 600 tokens per day, it would take more than a millennium to destroy even 1% of the supply.
Projected Price of XRP if 10% of Supply Burned
Google Gemini modeled what might happen if 10 billion XRP, equivalent to 10% of the total supply, were removed from circulation. At the time of press, XRP trades around $2.79 with a market capitalization of roughly $166 billion. If the supply were reduced to 49.48 billion tokens while the market cap remained constant, the price would increase to $3.25.
Long-Term Projections for XRP
In a sustained scenario of higher demand combined with a reduced circulating supply, Gemini projected that XRP could stabilize within the $10 to $15 range. At those levels, the market capitalization would stand between $495 billion and $742 billion. Achieving and maintaining these levels would require consistent adoption and liquidity growth.
While XRP's current burn mechanism has only removed a fraction of the token supply over more than a decade, the idea of a large-scale burn continues to attract interest. Modeling indicates that a 10% reduction could push XRP above $5 initially and potentially set the stage for long-term growth.
