XRP Ledger Base Reserve Reduced by 90%

XRP Ledger developers have lowered the base reserve for accounts by 90%, from 10 XRP ($26.80) to 1 XRP ($2.68), following a recent price surge in the cryptocurrency.

According to on-chain data, the change was implemented at 10:45 p.m. UTC on Monday, validated in ledger 92508417. The base reserve requirement represents the minimum amount of XRP needed to keep an XRP Ledger account active. This adjustment was made through a fee voting process where validators on the network collectively agreed to changes in reserve settings, aiming to enhance network accessibility by lowering account creation and maintenance costs, thereby encouraging increased activity.

The XRP Ledger's reserve requirements were last reduced from 20 XRP to 10 XRP in September 2021 during the prior crypto bull market when XRP was priced around $1. Additionally, the reserve increment fee was reduced by 90% from 2 XRP to 0.2 XRP, which means for each extra item an account owns (like trust lines to non-XRP assets, offers, or escrows), an additional 0.2 XRP is required to prevent excessive resource consumption.

“XRP Ledger reserves just dropped,” confirmed XRPL validator “Vet.” “Activating an XRP account now costs 1 XRP. Holding a Token Trustline only costs 0.2 XRP. Excess XRP is now available for spending.”

Support for the measure came from various validators. Ahead of the implementation, XRPL Labs stated that although increased ledger activity could be challenging, it represented a “good problem to have,” as infrastructure providers were already improving their performance.

XRP Price Surge

The timing of this reduction coincides with a substantial increase in XRP's price, which has surged over 448% in the last month. As of now, XRP trades around $2.68.

XRP, associated with digital asset infrastructure firm Ripple, has recently surpassed Tether's USDT and Solana's SOL, becoming the world's third-largest cryptocurrency, with a market cap of $153.7 billion. Only Bitcoin and Ether rank higher, with market caps of $1.9 trillion and $432.9 billion, respectively, while USDT and SOL sit at $134.7 billion and $106.5 billion.

Presto analyst Peter Chung noted that XRP's recent strength is partly driven by rumors of the NYDFS nearing approval of Ripple's proposed stablecoin RLUSD. Additionally, SEC Chair Gary Gensler's announced plans to step down in January may ease Ripple's legal challenges under potentially more crypto-friendly leadership.

"Gensler stepping down is also favorable as it suggests the SEC under new leadership might settle or withdraw many outstanding lawsuits, including the appeal against Ripple," Chung explained. "The duration of the rally is uncertain, but if the XRP community can utilize the RLUSD to promote the ecosystem on the XRP Ledger, they may maintain momentum. Ripple will certainly benefit from reduced distractions from the SEC lawsuit."

Market participants are also closely observing for potential spot XRP ETF approvals in the U.S., with several asset managers like 21Shares, Bitwise, and WisdomTree having filed for such funds.