Kamilah Stevenson, a well-known market analyst, has raised concerns regarding recent claims that an upcoming upgrade to the XRP Ledger could make XRP optional and weaken its demand. She argued the reality is more complex, suggesting critics may be missing important details about how XRP requirements are handled under the proposal.
Understanding the Proposed XRP Ledger Upgrade
The proposal under discussion would allow businesses or applications to sponsor users’ XRP transaction fees and account reserves. Under this framework, users would still control their private keys and accounts, but could utilize services based on the XRP Ledger without having to purchase XRP up front.
This option has triggered debate. Detractors have pointed out that newcomers would not be required to acquire XRP solely to open an account or to hold issued assets. Kamilah Stevenson acknowledged that this visible source of retail demand might decrease if the amendment takes effect. She described it as “one kind of visible demand” that would be changed by the proposal.
Reserves Shift from Users to Sponsors
Dr. Stevenson explained that, although users may no longer need to purchase XRP directly, the reserve requirement does not disappear. Instead, it shifts to the sponsoring business or application. She detailed that each account on the ledger still needs to meet a 1 XRP base reserve, and each added object, such as a trust line for an issued asset, requires 0.2 XRP.
To illustrate, she calculated that an account holding two issued assets would need 1.4 XRP in reserves. On a larger scale, 100,000 accounts would require 140,000 XRP; one million accounts would need 1.4 million XRP; and 10 million accounts would necessitate 14 million XRP to cover reserve requirements.
| Number of accounts | Reserve per account (2 assets) | Total XRP required |
|---|---|---|
| 100,000 | 1.4 XRP | 140,000 XRP |
| 1,000,000 | 1.4 XRP | 1,400,000 XRP |
| 10,000,000 | 1.4 XRP | 14,000,000 XRP |
Stevenson emphasized that reserve XRP is locked, not spent. When an account or ledger object is deleted, the reserve can be reclaimed, making these reserves more similar to security deposits or treasury floats, rather than an ongoing expense.
Transaction Fees Remain Modest
Transaction fees remain a minor factor for business balances. With a base fee of 10 drops, or 0.00001 XRP, processing one million transactions would burn about 10 XRP. The reserve requirements consequently have far greater implications for companies building on the XRP Ledger than transaction fees themselves.
Amendment Process Demonstrates Caution
Dr. Stevenson also referenced the cautious XRP Ledger amendment process, noting that previous iterations of the Batch and Permission Delegation features were pulled after the discovery of security issues. These features were revised and resubmitted after concerns were addressed, instead of being rushed to deployment.
Mini dictionary: XLS-68 is a proposed technical amendment for the XRP Ledger that enables account sponsorship, allowing businesses to cover costs that would otherwise require users to obtain XRP.
Summing up, Stevenson observed that the XLS-68 upgrade should be seen as a trade-off. It could lead to a reduction in small XRP purchases by individuals at account creation, while simplifying the process for large-scale application deployments on the XRP Ledger.
Whether increased enterprise adoption results in a net increase in locked XRP or reduces the network’s overall XRP demand is, according to Dr. Stevenson, “a genuinely open question.”
