Company: TOXR
Filing Date: 2025-12-10
Form Type: 424B3
Source: 0001213900-25-120172
Chunk: 32

Company: 21Shares XRP ETF
Filing Date: 2025-12-10
Form: 424B3
Chunk 32
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 other digital assets
such as bitcoin or ether, XRP is not and was not mined gradually over time. Instead, all 100 billion XRP tokens were created at
the time of the XRP Ledger’s launch in 2012. This means that every XRP token that exists today, or will ever exist, was generated
from the outset of the XRP Ledger. As a result, there is no ability for the supply of XRP to be adjusted in response to economic conditions.
For instance, there is no ability for the supply of XRP to be increased to meet rising demand, which could lead to price volatility.
In addition, unlike blockchains that utilize “proof-of-work” or “proof-of-stake” where validators or stakers
are rewarded with newly minted coins or 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