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Implications as XRP Ledger reduces base reserve from 10 XRP to 1

by Ndianabasi Tom

XRP Ledger (XRPL) has significantly lowered its base reserve requirements, reducing the cost to activate and maintain accounts on the network. This move is expected to make XRPL more accessible to users and free up locked XRP for existing users, potentially driving broader adoption.

90% cut in XRPL base reserve requirement 

The leading blockchain platform reduced its base reserve requirement, a critical operational parameter, from 10 XRP to 1 XRP. Implemented on 2 December 2024, the change has significant implications for the XRPL ecosystem. Not only does it make the network more accessible to a wider audience, but it also unlocks liquidity for existing users, allowing them to deploy previously reserved XRP for transactions, staking, or other financial activities.

Notably, this 10 XRP base reserve system was designed to limit ledger size and prevent spam accounts with minimal XRP. However, by lowering the cost to activate an account on the decentralized network by 90%, XRPL has significantly lowered the financial barriers for new users. Particularly, users can now fund XRPL wallets with just $2.43, down from the previous requirement of $24.30, citing current XRP price. 

The positive development was announced on X by a pseudonymous XRPL validator operator. “XRP Ledger reserves just dropped! Activating an XRP account now costs 1 XRP. Holding a Token Trustline only 0.2 XRP. Excessive XRP is now freed up in your account that you can spend!” the user stated, celebrating the enhanced accessibility the change brings to users.

According to the update, the owner reserve for XRP accounts has been reduced from 2 XRP to 0.2 XRP, lowering the requirement for holding objects like non-fungible tokens (NFTs), trust lines, signer lists, oracles, and owner directories. 

Read also: Will Wisdom Tree’s XRP ETF Filing in the US push XRP to new heights?

What is reserve requirement on XRPL?

In blockchain ecosystems like XRPL, reserve requirements mandate a minimum amount of cryptoasset that users must hold in their wallets to prevent spam accounts and ensure network security and stability. On the XRPL, it initially required 10 XRP to activate a wallet and additional reserves for establishing trustlines or holding tokens. These requirements serve as a safeguard against network overloads while promoting stability and functionality.

Notably, discussions around adjusting XRPL reserve requirements gained traction months earlier. On 16 October 2024, XRPL developer Wietsewind revealed that XRPL Labs nodes had been configured to support a lower reserve requirement. However, implementing the change required a validator vote and restart, which culminated in the reserve requirement update.

Any trade-offs? 

XRP’s decision to lower its base reserve requirement from 10 XRP to 1 XRP has significant implications for the network. Let’s break down the trade-offs involved by looking at the pros and cons below:

Pros:

  • Increased Accessibility: With a lower reserve requirement, new users can join the network with a much smaller upfront cost, making it more accessible to a broader audience.
  • Improved Wallet Management: The reduced reserve requirement also means that users have more flexibility in managing their wallets, as they can now allocate more funds to other uses.
  • Enhanced Network Growth: By lowering the barrier to entry, XRP is poised to attract more users, developers, and businesses, which can lead to increased adoption and growth of the network.

Cons:

  • Potential Security Risks: Lowering the reserve requirement may increase the risk of spam transactions or malicious activity on the network, as users may be more inclined to engage in such behavior with lower upfront costs.
  • Network Congestion: An influx of new users and transactions may lead to network congestion, potentially slowing down transaction processing times and affecting overall network performance.
  • Inflationary Pressures: Reducing the reserve requirement could lead to an increase in the circulating supply of XRP, potentially causing inflationary pressures and affecting the token’s value.

Acknowledging potential challenges, Wietsewind highlighted the trade-offs involved. “The number one concern would be increased activity on the ledger to the point where it becomes a challenge for infrastructure,” he stated. 

Despite the above, Wietsewind welcomes the anticipated surge in activity, describing it as “a good problem to have.” He added, “True engineers love challenges. If increased use of the ledger due to lower barriers to entry means infra providers have to step up their game…then so be it.”

Overall, XRP’s decision to lower its base reserve requirement is a strategic move aimed at driving growth and adoption. While there are potential risks involved, the benefits of increased accessibility, improved wallet management, and enhanced network growth may outweigh the drawbacks.

Read also: XRP claims 3rd largest cryptocurrency spot; eyes new all-time high price.

(Potential) Impact on XRP Price 

The 90% reserve requirement reduction comes at a time of renewed bullish sentiments for XRP, which recently surged to 2024 high of $2.77—its highest level since early January 2018. The increased value reflects broader confidence in the Ripple-backed utility token, fueled by an earlier court verdict that XRP is not a security in a long-standing legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC). Ripple’s plan to launch a stablecoin, RLUSD, has also contributed to XRP’s bullish momentum. 

Meanwhile, the cryptoasset, XRP, which recently reclaimed the 3rd-largest cryptocurrency spot by market cap rankings, is up by nearly 30% in the past seven days. Moreover, XRP has emerged as one of the best performing assets in the crypto market in the past 30 days, recording a price gain over 340%. 

Read also: Ripple and XRP Explained


Ndianabasi Tom A Petroleum Engineering degree holder, Ndianabasi’s interest since 2018 has been studying the ever-growing field of blockchain and cryptocurrency, keenly evaluating the innovation, exploration, and expansion of this field locally and globally. The founder of Nitadel a media platform, Ndianabasi has been a Writer at Crypto Asset Buyer (CAB) since 2021. When he is not drilling resources in the blockchain and cryptocurrency field, Ndianabasi is singing, reading, watching crime movies, or playing football.