In order to support its price, Ripple decided to stop selling XRP and embark on buying back the tokens in the second and third quarters this year.
Ripple chief technology officer confirmed that validators could pressure the company to burn its 48 billion XRP tokens, whether it likes it or not.
In the past, the community criticized the company – which currently holds nearly half the total XRP supply – for selling off tokens. However, in recent times, the company seems to have stopped the practice after resolutely refuting price manipulation claims.
According to the tweets by Ripple CTO, the community has a “very democratic” blockchain that can easily vote for Ripple to burn their entire XRP tokens supply.
Yes. There would be nothing Ripple could do to stop that from happening. Public blockchains are very democratic. If the majority wants a rules change, there is nothing the minority can do to stop them.
— David Schwartz (@JoelKatz) December 2, 2020
Ledger’s validators have to give XRP Ledger amendments an 80% approval rating for the process to commence. If that amendment stays above that threshold for two weeks, it becomes activated on the XRPL. Users gain the ability to write checks to each other with the amendment for a predetermined amount of XRP that is redeemable after a certain period.
Senders will be able to sign transactions and create virtual checks for specific destinations and amounts with the upgrade. Receivers have to decide to “cash” them for the XRP to move. Otherwise, they will just stay in the ledger to be cashed later in case the checks fail due to potential sender issues such as insufficient liquidity or balance.
November last year, Ripple decided to burn 55 billion of the ledger’s native currency Lumens, which was in excess supply. The total supply of Stellar reduced from 105 billion to 50 billion XLM tokens at the time. Therefore, Schwartz’s comments can be described as somewhat a postscript of earlier happenings.
At that time, Schwartz criticized the Stellar Development Fund for deciding to burn over 50% of the total XLM tokens.
Jed McCaleb, the co-founder of Stellar, was quick to return fire, saying that Ripple could as well burn as many tokens likewise.
Schwartz admitted that that is applicable, but via a non-traditional method such as sending them to an inaccessible account or using the tokens as fees. On the other hand, the SDF defended itself, stating that burning those tokens was a way of increasing the efficiency of the system as it is easier to work with fewer lumens.
For a long time, Ripple has suffered a lot of criticism in the cryptocurrency industry to sell tokens routinely. Since December of 2017, Ripple has been able to sell sold an average of 196 million XRP each month, according to an XRPArcade report published in early 2020. Implying, a total of 5.5 billion XRP had been sold as of April or exactly $3.45 billion at press time.
In order to support its price, Ripple decided to stop selling XRP and embark on buying back the tokens in the second and third quarters this year. The company used a repurchasing program to buy XRP worth $45.5 million in Q3. Although the figure might not be large enough to significantly impact XRP’s value, the company suggested that it is a necessary initiative to buoy the market sentiment around the digital asset.