Unusual Coinbase-XRP Burn Trend Spotted On-Chain

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As an analyst with extensive experience in the cryptocurrency market, I find Coinbase’s decision to burn 20 XRP as fees for internal transfers to be a subtle yet intriguing move. While it is unclear as to the exact reason behind this action, the speculation that it aims to empty out wallets seems plausible given the lower reserve payments Coinbase implemented a few years ago.

Coinbase exchange might be burning XRP in what might be considered the most subtle or unusual move ever. According to insights shared by block explorer XRPScan, the American trading platform incinerates a portion of the fees it receives from every internal XRP transfer.

XRP burn – unusual bullish effort

Coinbase brought back XRP trading on its platform following a judicial ruling by Judge Analisa Torres, which determined that XRP is not classified as an investment contract. According to XRPScan’s report, Coinbase incurs a fee of 20 XRP each time it transfers funds internally within the exchange.

It’s challenging to identify the exact cause of this burning, but according to XRPScan, it appears that users are emptying out their wallets during these transfers. Gas fees on Coinbase have become expensive due to the decrease in reserve payments for wallet transactions, which were set at 10 XRP several years ago.

Coinbase charges a fee of 20 XRP when transferring funds between its own wallets. This fee is still in place despite the fact that the wallet balances were reduced to hold only 10 XRP several years ago.— XRPScan (@xrpscan) June 6, 2024

An observation emerged from XRPScan regarding a transaction where 39,401,162 XRP, equivalent to approximately $20,712,323, was transferred from an anonymous wallet to Coinbase. The cryptocurrency community is responding to this unexpected transfer, as the excess payment for gas fees appears to benefit XRP more than Coinbase itself.

According to Thomas Silkjær, the head of analytics and compliance at XRP Ledger Foundation, an alternative approach for reducing transaction costs on the trading platform would be to eliminate linked wallets instead of processing deletion requests.

XRP competing as viable payment option

With real numbers representing up to 20 XRP that Coinbase transfers, this amounts to approximately $10.468 considering the present value of XRP at around $0.5234 per coin.

The size of this expense is significantly larger than what’s typical on other competing protocols. Nevertheless, XRP holds merit for smaller retail transactions due to its unique functionality. This aspect is crucial in justifying XRP during the lawsuit brought against it by the US Securities and Exchange Commission (SEC).

By a large margin, XRP is still regarded as one of the top crypto payment coins in the industry.

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2024-06-06 12:35