XRP Deflation Debate Surfaces Amid 11,629,982 XRP Burn Data

The broader crypto community has reignited the debate about XRP being inflationary or deflationary amid a recent post about the sheer number of XRP burned by the XRP Ledger (XRPL).

In a recent tweet, the renowned crypto author Panos Mekras proclaimed, “XRP is deflationary.” He made the remark following an XRPL ambassador’s post indicating that the XRP Ledger has burned 11,629,982.79 (11.6 million) XRP tokens since inception.

$XRP is deflationary! #FridayFacts https://t.co/PF8l0IkUAE

— Panos 🔼{X} (@panosmek) October 6, 2023

However, an X user responded to Mekras’s claim with an alternative perspective. The commenter argued that while XRP might be deflationary regarding the total existing XRP, it could appear inflationary to holders. 

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The reasoning behind this perspective was that price-tracking resources measure XRP’s market capitalization using its circulating supply. According to the commenter, as long as Ripple continues to release XRP on the open market, there is an illusion of inflation.

Expert Disagrees

Meanwhile, Mekras, who authored “Understanding the Crypto Economy,” offered a counterpoint. He highlighted that the debate surrounding XRP’s inflationary or deflationary nature had persisted for years. 

Specifically, the crypto author asserted that all XRP tokens had existed since day one, with 100% of the supply in circulation. Mekras argued that the practice of locking XRP in escrow, which Ripple and many other XRP holders had done, does not alter the fundamental deflationary nature of XRP.

This has been a debate for years, but all $XRP is in existence since day 1. 100% of supply has been circulating since day 1. Just because Ripple (as many other XRP holders have done) locked theirs in escrow – an XRPL feature – doesn’t mean anything. XRP is deflationary. Period. https://t.co/XXfrhbGjTI

— Panos 🔼{X} (@panosmek) October 6, 2023

Moreover, he called for consistency in how market tracking websites like CoinGecko or CoinMarketCap handle escrowed XRP. Mekras suggested that if Ripple’s escrowed XRP were excluded from circulating supply calculations, the same principle should apply to all escrows involving XRP holders.

“Otherwise, it makes no sense,” the crypto author concluded.

It is important to note that, unlike other tokens, the XRPL’s burn mechanism was not implemented to make XRP deflationary. Instead, it exists to mitigate the risks of spam transactions on the network. However, it continues to reduce XRP’s supply, contributing to the deflationary trend.

XRP Market Cap

According to data from tracking websites, XRP’s current market valuation is $27.89 billion based on an acclaimed circulating supply of 53,387,299,665 XRP. 

However, the tracking websites have another metric accounting for a coin’s total supply: Fully Diluted Valuation (FDV). Given XRP’s total supply of 100 billion tokens, its FDV is $52,245,619,302.