Pundit Shares 3 Ways to Address XRP Reserve Fee Issue as XRP Price Surge to $1.5 Raises Costs

The recent surge in XRP’s price has led to renewed discussions within the XRP community about reducing the network’s reserve fee. 

This fee, currently fixed in XRP, determines the cost of opening new accounts and creating additional objects on the XRP Ledger (XRPL). As XRP’s price climbs, the dollar value of these fees rises, creating concerns among users about onboarding.

Currently, the XRPL requires a reserve of 10 XRP to open a new account and an additional 2 XRP for each object created. When XRP traded for $0.50 at the start of this month, opening a new account demanded a reserve fee of $5 (10 XRP) while creating additional mandated $1 (2 XRP).

However, with XRP having recently surged to the $1.50 region, opening a new account would require a reserve fee of $15, additional $10. In addition, the reserve for each object has bumped to $5. This rise has led to concerns that the high fees could deter new retail users.

Community Proposes Solutions

Market commentator Krippenreiter recently proposed three potential solutions to address the reserve fee issue. Sharing his thoughts on X, he stressed the need for a plan as XRP prices continue to rise.

1/🧵 The debate on the reduction of XRPL account and object reserves seems to have come back. 🤔

The time when a lot of (not all) people agreed that a change was needed and that we had to find solutions was …

BEFORE

… the XRP price increase happened.

Meaning that for… pic.twitter.com/Uc8Obx8Nj5

— Krippenreiter (@krippenreiter) November 22, 2024

The first solution he proposed was Account Leasing. This system would allow users to lease XRP for reserve fees rather than locking up their own funds indefinitely. 

However, he acknowledged that implementing this solution would require major development and coordination, especially from RippleX developers, to refine the technical aspects and initiate community discussions. 

The second suggestion from Krippenreiter is a Fast Coordinated Restart of the XRPL nodes, allowing validators to propose new, lower reserve values to the network. While faster, this method would require planning to ensure the network remains operational during the process.

However, according to Krippenreiter, another approach would include integrating the reserve fee adjustment into routine updates of the XRPL software, such as during the rollout of new versions. 

He calls this third method a Slow Coordinated Restart. Notably, this slower approach avoids disruptions but may delay relief for users facing high fees.

XRP Community Discussions

Krippenreiter revealed that his personal reserve balance in XRP is now equivalent to $50. Interesting, Eri, a prominent community member, also shared that her reserve fees had risen to $70. 

Yes, mine I noticed today was nearly $70.00 USD

— 🌸Crypto Eri 🪝Carpe Diem (@sentosumosaba) November 22, 2024

This echoed Krippenreiter’s remarks, who insisted that that the current reserve system struggles to adapt dynamically to XRP’s price changes, which have become more rapid amid the ongoing bull run.

In response, Mayukha Vadari, a senior software engineer at RippleX, pointed out that XRP’s recent price surge marks the fastest increase in at least three years, suggesting that stakeholders should wait for the market to stabilize before implementing drastic changes. 

Krippenreiter insisted that the static reserve system lacks flexibility in responding to sharp price increases. He maintained that the current system relies too heavily on manual interventions, such as node restarts.

Vadari responded by pointing out that most blockchains with reserve systems face similar challenges. Notably, she explained that making reserve fees dynamic could present risks. 

I believe all other chains that have some sort of reserve system do the same thing. There isn’t really any other way to do it, because raising reserves once you lower them is very difficult – people’s accounts would essentially be bricked.

— Mayukha Vadari (@msvadari) November 22, 2024

For context, if the network lowers reserve requirements and then needs to raise them later, users who onboarded during the lower fee period might find their accounts locked, as their XRP balances would no longer meet the rise in reserves.