Company: TOXR
Filing Date: 2025-11-07
Form Type: S-1/A
Source: 0001213900-25-107665
Chunk: 34

Company: 21Shares XRP ETF
Filing Date: 2025-11-07
Form: S-1/A
Chunk 34
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 tokens, XRP validators are not incentivized by block rewards since there is no new issuance of
XRP.

Additionally, the fixed supply
of XRP, combined with the burning of XRP (permanently destroyed) as transaction fees, could create deflationary pressure over time. A
small amount of XRP is burned with every transaction to prevent spam on the network. While the amount of XRP burned per transaction is
minuscule, over time, the total supply of XRP will slowly decrease. This could lead to a deflationary environment where the decreasing
supply drives up the price of XRP, making it less practical as a medium of exchange. Additionally, as the total supply of XRP slowly
shrinks due to burning, liquidity could become an issue in the distant future, potentially making it harder for businesses and users
to access sufficient XRP for their transactions or for the Trust to operate.

The fixed supply of XRP could
also contribute to price volatility, especially if demand fluctuates significantly. Since the supply of XRP is fixed, any significant
surge in demand can result in large price spikes. For example, during periods of high market activity or speculation, the price of XRP
could rapidly increase due to the inability to expand supply to match demand. This volatility could make XRP less predictable for businesses
that rely on it for payments. Digital assets with a flexible supply, such as stablecoins, can adjust to maintain a stable value. XRP,
however, could experience price swings that make it less attractive for everyday transactions or long-term financial planning.

The fixed supply of XRP may
also not scale well with rapidly expanding use cases. As more businesses, financial institutions, and payment providers adopt XRP for
cross-border transactions and other use cases, there is a risk that the fixed supply may not meet the growing demand, leading to supply
shortages and further price volatility. In the case of massive adoption, the scarcity of XRP could raise its value too much, making it
less appealing for day-to-day transactions or use as a liquidity bridge in cross-border payments, as businesses might prefer a more
stable and widely available currency.

<div align='center'>14</div>

The significant holdings of XRP by Ripple Labs and other early stakeholders could have an adverse effect on the market price of XRP.

The largest XRP wallets are
believed to hold, in aggregate, a significant percentage of the XRP in circulation. Ripple Labs holds a large portion