Vet (@Vet_X0), an XRPL dUNL validator, raised key questions about how these yields are generated and whether participants face risks such as impermanent loss and slashing penalties.

Yield Sources for FXRP and Native XRP Staking

For native XRP staking, Philion stated that the yield comes from securing decentralized services, such as an oracle network or a decentralized AI protocol. In this model, staked XRP would contribute to the stability and functionality of these services, and in return, participants would receive rewards.

Concerns Over Impermanent Loss and Slashing Risks

However, 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. Given the substantial amount of XRP that could be involved, this remains a key area of interest for the community.

Implications for XRP Holders

The ability to stake XRP and earn a yield on Flare could significantly expand XRP’s utility in the DeFi space. With FXRP, users will engage in DeFi applications, while native staking will provide an additional layer of functionality for decentralized services.