Ripple CTO David Proposes Fee Refund Model for XRP Ledger

David Schwartz, Ripple’s CTO, has floated a straightforward but potentially game-changing idea: have the XRP Ledger (XRPL) refund any fees users don’t actually spend, reshaping how transactions are ordered, consensus is reached, and overall fairness is maintained.

The discussion began after developers from the XRP Ledger ecosystem clarified how the Xahau Hook engine works. When a hook is created, the system calculates a fixed execution fee upfront. 

That fee doesn’t change later and is always added on top of the base transaction fee. While this makes costs predictable, it also means users often pay for compute they don’t use.

Developer Mayukha Vadari explained that this approach is different from Ethereum’s. On Ethereum, users specify how much gas they’re willing to spend, and if their transaction consumes less than that, the leftover gas is refunded. 

On XRPL’s Hook system, that refund doesn’t exist, because the network always assumes the worst-case compute cost.

“The transaction fee is just the worst-case scenario compute on the hook,” Vadari noted , “so you’re almost always paying too many fees.”

That led to a simple but pointed question from Vet, co-founder of NFT platform XRP Cafe: Why can’t XRPL offer refunds for overpaid hook fees?

Vadari responded that the hook fee isn’t seen as overpaid; it’s static by design. Changing that would be a big move, one that could affect how the network operates fundamentally. But Vet wasn’t convinced. He pointed out that if a user pays more than the actual network or load fee, the excess should go back to them.

When protocol developer tecqu joined the conversation, he raised a practical concern: if users knew they could get refunds, wouldn’t everyone start overbidding just to gain priority? That would distort the fee market and potentially overload the system.

That’s when Ripple CTO David Schwartz entered the thread and proposed something new.

He suggested a model where everyone pays a fee upfront, but only the minimum required to enter the ledger would be retained. Anything extra would be refunded:

“Compute the fee level required to get one more transaction into the ledger after the consensus transaction set is determined and rebate any fee above that level,” he said.

Schwartz acknowledged that this idea, while promising, could create complications. In XRPL’s current architecture, not all validators might agree on what that minimum required fee actually is. And if they disagree, it could lead to a split in ledger history, a risk that must be avoided.

“You might have to tweak that a bit to make it not break consensus,” he admitted, “but that shouldn’t be too hard.”

He also shared a fallback option: refund anything above the median fee level for transactions in a ledger. That method would sidestep validator disagreements and offer a more predictable baseline.

To avoid irregularities when the network is under low load, Schwartz proposed a simple rule, if there are fewer than 10 transactions in a ledger, the refund mechanism could be disabled or replaced with a minimum fixed fee.

Why This Matters 

Right now, XRPL burns all transaction fees, even the extra portion that wasn’t actually required. This helps reduce XRP’s overall supply, but it also means users often pay more than necessary, especially when Hooks are involved.

David Schwartz isn’t trying to stop fee burning altogether. What he’s putting forward is a smarter way to handle it, one where any extra, unused part of the fee could be returned. It’s a fairer model that still keeps the system running the way it should.

At the heart of this whole discussion is a simple point: the way transaction fees are designed really does make a difference.

Ethereum lets users overestimate and refunds unused gas. XRPL, on the other hand, locks in a fixed fee. Now, Schwartz’s idea of partial refunds adds another option to that mix, one that tries to balance fairness, ease of use, and network stability.

For now, it’s just an idea. But it’s one that’s getting attention, and could shape how fees work on XRPL in the future. But the fact that it’s coming from Ripple’s CTO, and is gaining traction in public discussions, means it could evolve into something more serious.