Researcher SMQKE has brought attention to XRP's inherent deflationary and scarcity mechanism. The researcher's findings suggest that XRP's supply is continuously declining due to a small portion of the token being permanently destroyed with each transaction processed on the XRP Ledger. This built-in reduction mechanism ensures a fixed and gradually decreasing supply, differentiating XRP from other cryptocurrencies that can be mined or newly generated.
According to Ripple's technical papers, 0.00001 XRP is burned per transaction, and these destroyed tokens are never recovered by any entity. This process, corroborated by findings from Aigubov and Magomedtagirov (2017) and Ripple’s 2020 documentation, confirms that XRP's total quantity will consistently decrease as network activity expands. This deflationary structure reinforces long-term scarcity, a feature that has become fundamental to XRP's economic model.
SMQKE has linked this mechanism to XRP's market outlook, emphasizing that increased usage naturally reduces its supply. The documentation explains that assets which are limited in supply and actively used tend to appreciate in value over time. Consequently, growing adoption and transaction volumes could potentially strengthen XRP's scarcity and enhance its long-term valuation potential.
Deflationary Design and Bridge Asset Functionality
XRP was initially developed as a bridge asset intended to facilitate faster and more cost-effective transactions between various forms of money, including fiat currencies, cryptocurrencies, and tokenized assets. Its decentralized consensus protocol enables the network to validate transactions without the need for mining, thereby preventing inflationary growth in supply while maintaining operational efficiency.
This design has positioned XRP as an attractive option for global financial settlements, particularly for institutions seeking real-time cross-border solutions. In contrast to centralized stablecoins like USDC or state-backed Central Bank Digital Currencies (CBDCs), XRP's supply decreases with its usage, introducing a scarcity element that bolsters its economic resilience.
The combination of its deflationary tokenomics and its practical payment utility offers XRP a unique position within the digital finance sector.
Rising Institutional Interest and Supply Concerns
According to a widely shared update from crypto commentator “The Real Remi Relief,” companies such as ONDO and Nasdaq are strategically positioning themselves within the tokenization industry. ONDO, which is reportedly collaborating with Ripple, has reportedly urged the U.S. Securities and Exchange Commission (SEC) to exercise caution regarding Nasdaq's expansion into this sector.
Remi Relief cited ONDO’s warning that “there’s not enough XRP to go around,” indicating concerns about a potential supply crunch. ONDO, a significant participant in the Real World Assets (RWA) infrastructure, appears keen on preserving its early mover advantage as institutional adoption accelerates.
As XRP's circulating supply continues its downward trend and institutional demand escalates, market observers believe that the asset's scarcity could play a pivotal role in shaping its future within the tokenized financial ecosystem.