Company: TOXR
Filing Date: 2025-08-22
Form Type: S-1/A
Source: 0001213900-25-079981
Chunk: 32

Company: 21Shares XRP ETF
Filing Date: 2025-08-22
Form: S-1/A
Chunk 32
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 participate in any staking program, and accordingly investors will not receive any staking rewards or other income.

The XRP Ledger does not use
proof-of-stake validation. Accordingly, neither the Trust, nor the Sponsor, nor the XRP Custodian, nor any other person associated with
the Trust will, directly or indirectly, engage in action where any portion of the Trust’s XRP becomes subject to proof-of-stake
validation or is used to earn additional XRP or generate rewards or other income. Accordingly, the Trust may underperform other pooled
investment vehicles that may participate in staking. Investors who seek to participate in staking rewards should consider other investment
options.

The fixed supply of XRP may negatively impact the operation of the XRP Ledger.

Unlike 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 miners 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