XRP Holders: $134 Billion in Yield Awaits on Flare Network
1min read Flare Labs, the company behind the Flare Network, has announced a significant development for XRP holders. According to Hugo Philion, the co-founder of Flare Labs, approximately $134 billion worth of XRP will soon be eligible to earn a yield on the Flare Network through FXRP and native XRP staking.
This development is expected to expand the utility of XRP in the decentralized finance (DeFi) space. With FXRP, users will be able to engage in DeFi applications, while native staking will provide an additional layer of functionality for decentralized services. Recently, Flare integrated XRP into its test network, marking an important step toward full implementation.
However, the announcement has also raised concerns about the sources of these yields and potential risks for participants. Vet (@Vet_X0), an XRPL dUNL validator, has questioned how these yields are generated and whether participants face risks such as impermanent loss and slashing penalties.
Philion explained that FXRP yield will be generated through decentralized exchange (DEX) liquidity provision and lending. This means participants who provide FXRP as liquidity on a DEX or for lending markets will earn returns based on trading fees and interest payments from borrowers. For native XRP staking, Philion stated that the yield comes from securing decentralized services, such as an oracle network or a decentralized AI protocol.
Vet quickly pointed out a potential risk associated with FXRP yield: impermanent loss. This occurs when the value of assets in a liquidity pool changes compared to when they were initially deposited, potentially leading to losses for liquidity providers. Impermanent loss is a well-known risk in DeFi and could impact users seeking stable returns.
Vet’s most significant concern was slashing rules for native XRP staking. In most staking models, slashing refers to penalties imposed on validators or participants who fail to meet network requirements. Vet’s question implied a need for clear guidelines on how XRP stakers could be penalized if their provided capital was used to secure decentralized services. So far, Philion has not provided a detailed explanation of these slashing mechanisms, which remains a key area of interest for the community.
