XRP Yield: 5 Questions to Ask Before Any Yield App

If your XRP is sitting in a wallet doing nothing, you've probably seen apps promising to put it to work. Some pay a little, some can trap your money, and the rate on your screen tells you almost nothing about which is which. So, before you put a single XRP into any yield app, ask these five questions. I'll use three real apps as examples so you can see what the answers look like. So, question number one, where does your XRP actually go?

Number two, what rate is the app showing? Number three, what do you get paid in? Number four, how do you get your XRP back? And number five, what can make you lose money? You see, apps and rates change, but these five questions stay the same.

So, number one, where does your XRP actually go? You see, most XRP yield doesn't happen on the XRP ledger. It first gets turned into a wrapped version on another network, and that wrapped token is a promise that whoever issues it that real XRP backs it. So, the first thing to ask is whose version of XRP you're holding, and who you have to trust for it to stay worth one XRP. You see, one wrapper might be backed by a company holding the XRP, another might be created by a system built into a blockchain, and the third might be issued through a bridge run by an exchange.

They all carry the same ticker, but fail in different ways. For example, CBXRP on the base chain Moonwell describes it as backed one-to-one by XRP held in Coinbase custody. And on the CBXRP contract, Moonwell's governance forum notes it has a function that can bar an account from transferring it. FXRP on Flare is minted one-to-one through Flare's F-asset system, which Flare says works without a third-party bridge. Then there's Binance pegged XRP on the BNB chain bridged by the Binance bridge, and CoinDesk notes the original project isn't responsible for issues with the bridge token.

So, don't take the app's word for which XRP this is, click the token and read what it says. In whatever app you use, find the token, find who issued it, and write down who you're trusting. If you can't name that, you don't know where your XRP went. Question number two, what rate is the app showing? Because the rate on the screen is just a snapshot, it can change depending on when you're watching this video.

In a lending app, it moves [music] with how much people are borrowing. And when demand drops, the rate can fall close to nothing in a bear market. And in a staking style app, it depends on how much money is flowing into pay the stakers. So, ask what's producing the number and what happens to it when the conditions change. And then size your position as if the rate were zero because if the position only makes sense at today's rate, then it's too big for you.

Because the rate is set by market utilization per Moonwell's docs. So, this is just simply what the app shows today because tomorrow it can be very different. And question number three, what do you get paid in? Because yield can arrive as more of the tokens you deposited, as a different reward token, or as points that may or may not turn into anything. And a different token means you now own a second asset with its own price risk.

And points are only a promise of something later. So, check which one you're getting and whether you can actually sell or you can even use that reward coin. Base interest is paid in the same token that you supply. And with Firelight, emissions are paid in FXRP and fees are converted to FXRP and added to each staker's position. Now, question number four, how do you get your XRP back?

You see, people skip this question and it matters the most. Getting in a pool is easy and the difference shows up on the way out. An exit can fail in two ways. The app might not have the cash to pay you right now because in a lending app, your deposit is lent to borrowers and withdrawals can fail until they repay or new money comes in. Or the app might lock you in on purpose for a set period of time and put rules in place for you to keep earning yield.

So, here's example A. We'll call this the exit test with Moonwell. The simplest protection is just a test. You deposit a small amount you'd be relaxed about if it went to zero or you couldn't withdraw it. And then you test withdrawing it.

If the withdrawal isn't clean or you can't work out on how to do it, it's too complicated for you, you just don't deposit more. In Moonwell's own documentation, it says withdrawals depend on available liquidity. And a withdrawal larger than what's available will simply fail. So, before you deposit a large amount, cuz a lot of people watch these videos, you might have a million, 10 million, 50 million dollars. Start with a few bucks, like 10 bucks or something.

Before you deposit, find this number. It's just simply how much the market can pay out right now in yield. And in Moonwell's docs, a withdrawal larger than available liquidity will fail. So, depending on how much money you want to put into a pool, you want to make sure that it's not more than the liquidity that's even there. Near 100% utilization, withdrawing can be difficult.

And on August 27th, Moonwell was exploited on Base. CertiK and PeckShield estimated about 8.7 million dollars in losses. And Moonwell responded by setting borrow caps on all Base core markets to 1 WEI, which stops new borrowing. And reporting says that change blocked new loans without touching withdrawals. And then on August 25th, a separate Moonwell Base market, CB Ethereum, showed over 100% utilization.

And suppliers reported being unable to withdraw nearly all funds. So, that second market shows why the test matters. When borrowers have taken most of the cash, your money can get stuck with no hack at all. For example, on Fireflight is the lockup. So, Fireflight works differently.

Your XRP is staked to back cover for other DeFi apps because that capital has to stay available. While claims can still be checked, exits take longer than you'd expect. So, before you deposit, find the exact exit time and ask whether you could live with your XRP locked for that long. Because Fireflight says deposits support 30-day cover periods. So, unstaking withdrawals take longer than before.

The unstaking window increased to align with a 30-day cover periods as cover is enabled. And CryptoSlate's reading of Fireflight's withdrawal rules says that just over 30 days to nearly 60 days, depending on when you ask to leave. And exit returns FXRP on Flare, then redeems to XRP on the XRP Ledger. So, find the exit time on the page itself and don't rely on a simple video for it because that could change. Now, question number five, what can make you lose money before you ever even get into a pool, you need to know the risks associated with it because every source of yield has a way to fail, and you should be able to name it before you deposit.

So, look in three places. The wrapper from question one, the app's own code, and the prices it relies on, and what your deposit is backing. In a lending app, your deposit backs loans. In Firefly, it backs cover, which means your XRP is the money used if something goes wrong in other apps. The extra yield and the extra risk comes from the same place.

On Firefly, compounded rewards stay in the vault and are subject to slashing the same way as the original deposit. On Firefly, Firefly cover is not insurance. And then on the Moonwell August 27th exploit, an attacker inflated the price of Mamo, a thinly traded token accepted as collateral, then borrowed real assets against [music] it. And the Moonwell exploit's worth understanding because the app trusted a price, and the price was fake. So, include the prices an app depends on in your answer, along with what happens if one of them is wrong.

And you won't always be able to answer that fully, which is why you start small. You don't deposit or ever risk more than you can afford to lose. So, here's what you check. Write down your answers to all five questions before you deposit anything. And if you can't answer one, then you wait.

Then run a small test, use an amount you'd be relaxed about losing entirely, then withdraw some to prove that the exit works, and see what it actually pays you at the end of the month. Doing this for one app, it might take a while. Doing it for a whole stack of XRP across routes that keep changing is where most people stall. Not because you're dumb or you don't understand it, but because you got a full-time job, you got a family, you got kids. You don't have time to watch all of these pools.

So, that's where our private intelligence network is for. We run your routes against what you actually hold. We research where the earnings go next on the best blockchain. And you're in a room of serious investors who've been through multiple market cycles. So, what I've done is I've left a link in the description below.

It's a free briefing that explains how to put your XRP to work in the DeFi space. And if you have $50,000 or more in crypto, stablecoins, or a combo of the two. Go watch it right now. If it makes sense after that, just simply click the button below, fill out the short form, it takes less than a minute, and book a strategy call with an [music] expert on my team. And if our accelerator program and our intelligence network isn't the right fit for you, they'll be the first ones to let you know.

And if you're not at $50,000 yet in crypto, then stay on [music] this channel, make sure you subscribe for more. We'll keep showing you how to get there. And as always, you understand that crypto carries risk, including losing everything that you put in if you don't know what you're doing and you try and do it all by yourself. These videos are purely educational material only, not financial advice. There's no guarantee of any results here, cuz you know results aren't typical.

Every rate and figure shown in these videos are accurate on the date of recording, but you might see this video weeks or months later. So, it's up to you to do your own research and verify it for yourself. So, I appreciate you for watching this video. I will see you on the next one through the link below. As always, you know what to do.

Stay bullish.