Ripple's XRP Ledger is designed for fast, low-cost international payments. Its fee structure is fundamentally different from Ethereum or Bitcoin, offering near-zero transaction costs that make it ideal for real-world financial applications.
The XRP Ledger uses a unique fee mechanism called a 'transaction cost.' Unlike Ethereum, where fees go to miners/validators, XRP fees are permanently destroyed (burned). This deflationary mechanism means the total XRP supply gradually decreases over time with every transaction.
The XRP Ledger uses the Ripple Protocol Consensus Algorithm (RPCA), not proof-of-work or proof-of-stake. This consensus mechanism allows the network to process 1,500+ transactions per second with 3-5 second settlement times while maintaining extremely low fees.
While the base fee is 10 drops, the XRP Ledger can temporarily increase fees if the network is congested. This is extremely rare and the fee increase is calculated using the load_factor multiplier. Even at 10x normal load, XRP fees remain a fraction of a cent.
Separate from transaction fees, the XRP Ledger requires all accounts to maintain a minimum balance of 10 XRP (the base reserve). This reserve is not a fee — it remains in your account. Additional reserve is required for each object (such as trust lines) you hold in the ledger.
Financial institutions use XRP for cross-border payments precisely because of its predictable low fees. Sending $10,000 internationally via XRP costs the same 0.00001 XRP as sending $1. This makes XRP particularly powerful for remittances, micropayments, and high-volume transaction systems.