- Ripple CTO, David Schwartz, publicly supports Xahau’s Burn2Mint process, an innovative approach believed to generate demand for XRP.
- Despite some community concerns over the irreversible nature of converting XRP to XAH, Schwartz explains the rationale and potential benefits of the mechanism.
In an interesting development in the blockchain industry, David Schwartz, the Chief Technology Officer (CTO) of Ripple, has expressed his support for the Burn2Mint mechanism introduced by Xahau, a sidechain on the XRP Ledger (XRPL) designed to facilitate smart contracts. Xahau, which operates with its native token XAH, has recently been launched by XRPL Labs, the same team that brought us the Xumm wallet, offering early access to Hooks for smart contracts.
They lost me at burning ?
my XRP
for their token…
That will be a big NO
However someone wanting to use smart contracts on hooks may find it useful…
To each their own…— Norm ?????? (@NormHerb) November 1, 2023
Navigating the Burn2Mint Process
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However, this innovative approach has not been without its share of concerns from the community. The Burn2Mint process requires users to permanently burn their XRP tokens to obtain XAH, a transaction that is irreversible and results in the permanent loss of XRP. Amidst these reservations, Schwartz has stepped forward to shed light on the rationale behind Burn2Mint and the benefits it brings to the table.
Schwartz clarifies that Burn2Mint is not the primary method for acquiring XAH. Instead, users can obtain XAH through a variety of avenues including airdrops, rewards for mints, initial grants, and trading on centralized and decentralized exchanges. Burn2Mint serves as a secondary option, ensuring that individuals holding XRP have an additional, decentralized, and secure means of obtaining XAH early in the game.
He further explains that Burn2Mint helps in establishing a floor price for XAH, preventing users from overpaying for XAH in comparison to the XRP they burn. This mechanism also addresses potential challenges that could disrupt the launch of Xahau, such as a shortage in XAH supply or liquidity issues. Schwartz elaborates on why Xahau decided to implement Burn2Mint instead of a two-way bridge, highlighting that the latter would necessitate a custodian, introducing a layer of complexity, technical challenges, and legal risks.
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Addressing Community Concerns
Addressing the concerns of XRP holders wary of committing their tokens to acquire XAH, Schwartz reassures that if Burn2Mint remains unused, it does not negatively impact them. However, if utilized, it will reduce the XRP supply while creating a demand for it, potentially benefiting these holders.
“As an XRP holder, you should be pretty happy about it,”
Schwartz comments.
Schwartz concludes his statements by emphasizing that these views are his own and may not necessarily align with those of the Xahau team. He acknowledges the potential for misunderstanding or errors in his assessment.
Meanwhile, the XRP community has been closely monitoring the impact of Xahau on XRP’s supply. Noted community figure Krippenreiter predicts that the Burn2Mint mechanism is unlikely to see widespread use, with less than 1% of XRP’s supply expected to be burned for XAH. He bases this prediction on current market behavior and the availability of alternative means to acquire XAH, such as trading on exchanges.
Connect with Collin Brown on X (Twitter) for valuable market insights, frequent updates, and a touch of humor!
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