XRP holders are burning their coins to claim Xahau tokens, a rival digital currency that runs on a sidechain of the XRP Ledger. The XRP burn trend could have implications for the valuation and growth of both XRP and Xahau.
XRP, the native token of the XRP Ledger (XRPL), is facing deflationary pressure as users burn their coins to claim Xahau (XAH) tokens, a new digital currency operating on a sidechain of the XRPL. According to XRPScan, an XRPL explorer, the total number of XRP burns has increased significantly in recent times following the ongoing Xahau token claims period.
XRP Burn: A Positive or Negative Move?
Burning a digital currency is a process of permanently removing a portion of the supply from circulation, which can increase the scarcity and value of the remaining coins. However, in the case of XRP burn, the motivation behind the move is not to boost the price of XRP but to obtain Xahau tokens, which are seen as a major competitor to XRP.
Xahau Network was launched on the mainnet in November 2023, and since then, it has been offering Xahau tokens to XRP holders through a token swap mechanism. Users can burn their XRP and import XAH on the Xahau Network at a ratio of 1:1. The token swap is designed to last for six months, or until 600 million XAH are claimed, whichever comes first.
According to XRPScan, the release of the Xaman 2.6 upgrade version in December 2023 has fueled the XRP burn trend, as users have been flocking to claim Xahau tokens. As of writing, more than 23 million XRP have been burned, and more than 22 million XAH have been claimed, according to Xahau Network’s website.
Implications for XRP and Xahau
The XRP burn trend could have implications for the valuation and growth of both XRP and Xahau, as well as for the XRPL ecosystem.
On one hand, the XRP burn trend could reduce the supply and increase the demand for XRP, which could boost its price in the long run. XRP has a total supply of 100 billion, of which more than 99 billion are already in circulation.
Compared to the total supply of XAH, which is a little above 600 million, the XRP burn trend will only remove a relatively small proportion of XRP from the market. Moreover, the burn trend could also enhance the attractiveness of the XRPL, as Xahau Network is a sidechain that leverages the security and interoperability of the XRPL.
On the other hand, the XRP burn trend could also benefit Xahau, as it could increase its adoption and awareness among XRP holders.
Xahau could offer some advantages over XRP, such as lower fees, higher throughput, and more functionality. Xahau could also attract more developers and users who are interested in building and using smart contracts, DApps, and NFTs on the XRPL or pose a threat to XRP, as it could compete for the same use cases and markets as XRP, such as cross-border payments, remittances, and DeFi.
Whether the XRP burn trend will be a win-win or a zero-sum game for both digital currencies remains to be seen.
