XRP Ledger Faces Potential 1 Billion Coin Annual Burn Under Congestion, Developer Warns
A striking new analysis suggests that the XRP Ledger (XRPL) could face an annual burn of up to 1 billion XRP coins if it experiences sustained network congestion. Software engineer and AI startup founder Vincent Van Code (@vincent_vancode) posits that current projections for XRP coin destruction are severely underestimated because they fail to account for the protocol's load-scaling mechanisms under heavy network usage.
Underestimating the XRPL's Deflationary Power
Van Code argues that the commonly cited base fee of 0.00001 XRP per transaction only reflects a quiescent network state. However, should the XRPL approach its theoretical throughput limit of 3,400 transactions per second (TPS), the network's "Load Factor" mechanism would kick in, exponentially increasing transaction fees to deter spam. This critical distinction transforms XRP burn from a negligible factor into a significant deflationary force. In his "Supply Meltdown" simulation, Van Code outlines several scenarios: A "standard day" with 1.2 million transactions burns roughly 450 XRP. Under "global adoption" at 3,400 TPS, even with base fees, approximately 293 million daily transactions would burn about 2,937 XRP. However, if congestion drives transaction fees higher—to 0.001 XRP per transaction—the daily burn could surge to approximately 293,760 XRP. In a "full gridlock" scenario, where fees reach 0.01 XRP, the daily burn would skyrocket to an estimated 2,937,600 XRP. These escalated rates translate to a staggering 1 billion XRP being removed from circulation annually.
The XRPL's Built-In Burn Mechanism
The core of Van Code's thesis hinges on the XRPL's unique fee structure. Unlike other blockchains where transaction fees are paid to miners or validators, XRP transaction fees are irrevocably destroyed. "The fees aren't paid to miners. They aren't paid to Ripple. They are destroyed forever," Van Code emphasizes. This makes network demand and subsequent congestion a direct driver of coin destruction, serving as the XRPL's "ultimate deflationary engine." This mechanism ensures that as network utility and demand increase, the circulating supply of XRP naturally diminishes, potentially influencing its long-term value.
