XRP Burn Rate Plummets, Raising Concerns Over Tokenomics and Scarcity

XRP’s burn mechanism, once seen as a potential driver of long-term scarcity, is showing signs of weakness. Recent data highlights a dramatic collapse in burn activity, with just 163 XRP destroyed on September 21—far below the elevated levels recorded in July and August. Unlike Ethereum, which introduced its fee-burning mechanism through EIP-1559, or Shiba Inu, which regularly conducts community-driven burns, XRP relies solely on transaction fees for token destruction.

This model means that XRP is only removed from circulation when users complete transactions, at which point a tiny fee—usually less than a penny—is permanently burned. With network activity slowing, the amount of XRP destroyed has dwindled, making its impact on supply reduction negligible. For a cryptocurrency with nearly 60 billion tokens in circulation, this near-zero burn rate raises serious questions about scarcity as a bullish driver.

The decline highlights a fundamental difference between XRP and other major tokens that actively address supply through destruction. Shiba Inu leverages coordinated burns to shrink its massive supply, while Ethereum’s fee-burning system automatically eliminates a portion of ETH with every transaction. XRP, however, lacks such mechanisms, leaving its supply largely intact and unaffected by current usage trends.

The broader concern lies in what this trend reveals about XRP Ledger activity. With burns almost insignificant, network usage appears subdued, weakening one of the core narratives that long-term scarcity could eventually support price growth. Investors may now question whether XRP’s tokenomics can deliver value appreciation without an effective supply reduction system.

As the market turns its focus to fundamentals, XRP’s struggle with circulation and scarcity could influence its competitive position against other cryptocurrencies that actively implement supply management strategies.