An XRP Holder Proposed Raising Ledger Fees 100x to Burn More Tokens. Ripple’s CTO Emeritus Says Fee Revenue Is the Wrong Metric.

Technical Highlights

A proposal to raise XRP Ledger transaction fees 100x has garnered attention on social media, but Ripple's original architect, David Schwartz, warns that chasing a faster token burn could undermine the very thing that makes XRP worth holding in the first place.

Short Term Implications

The proposed fee hike would result in a fee of 0.001 XRP, or roughly $0.0015 per transaction, which amounts to a negligible dent in the overall token supply. With approximately 63.1 billion XRP tokens in circulation, valued at around $95.4 billion, such a small increase in fees would hardly make a noticeable dent in the overall supply.

The Bigger Picture

Ripple's CTO Emeritus argues that fee revenue is not a reliable measure of a blockchain's effectiveness. He believes that high transaction fees make a network less user-friendly, which undermines its appeal. Established payment networks thrive on affordability and reliability, and settlement ledgers should follow the same principles.

Industry Implications

Payment processors and remittance companies closely evaluate transaction costs when selecting a network. A ledger that suddenly becomes 100 times more expensive might drive them to seek alternatives. Moreover, users who exit the network wouldn't burn any XRP at all. This could transfer value from active users to passive holders without producing any real gains for the network.

Regulatory & Legal Outlook

The proposal remains a topic of discussion on social media. Changes to XRP Ledger fees can only occur if validators vote to approve new fee levels, and as of now, this idea hasn’t progressed to that point. In conclusion, the potential for a larger XRP burn does not justify the significant increase in fees, according to David Schwartz.