XRP Ledger (XRPL) Witnessing Unprecedented Increase in Account Deletions
XRP Ledger (XRPL), one of the oldest decentralized ledgers in the world, has witnessed an unprecedented increase in the number of account deletions, marking one of the biggest spikes in its history.
The activity was mainly associated with Poloniex, a well-known cryptocurrency exchange, which reportedly deleted around 15,000 old XRP accounts, resulting in the recovery of approximately 275,000 XRP tokens. It is worth noting that deleting an XRPL account is equivalent to the owner’s reserve, which amounts to 2 XRP per account.
Furthermore, as the process continues, the number of recovered tokens increases, accompanied by the burning of over 30,000 XRP in the form of fees. Thomas Silkier, Head of Analytics and Compliance at XRP Ledger Foundation, has highlighted this trend.
It is worth mentioning that this news came shortly after Poloniex paid $7.6 million to settle allegations of sanctions violations with the US Department of the Treasury.
Account Deletion by Poloniex and Token Burning
Poloniex’s decision to delete individual accounts and maintain a minimum reserve balance for each user has led to significant token burning in the form of fees. With the deletion of 15,000 accounts, a substantial amount of XRP tokens has already been burned.
However, the impact could be even more significant considering that the exchange owns 84,000 accounts. If all these accounts are deleted, it would result in the burning of 168,000 XRP.
This process involves identifying inactive or abandoned accounts and retrieving the associated XRP tokens. The recovered tokens can then be used by Poloniex for various purposes, such as increasing liquidity or supporting other exchange operations.
Surprisingly, it was found that the exchange created separate accounts for each of its users, maintaining a minimum reserve balance for each. This outdated practice seems to have been a result of ignorance or oversight regarding the use of destination tags, a feature in XRP Ledger that allows for efficient grouping and identification of transactions for a specific party. It appears that Poloniex has since transitioned to a model based on destination tags.