Insights
How to Earn Yield on XRP
XRP cannot be staked: the XRP Ledger reaches agreement without it (xrpl.org). XRP earns only when it is put to work, and the main way to do that on the ledger itself is providing liquidity to AMM pools.
3.9%
a year, every pool together, at last week’s pace
4.1%
a year, the XRP/RLUSD pool, at last week’s pace
What XRP can earn
- AMM pool fees. Deposit XRP with a token into its pool and earn a share of every trade the pool fills; withdraw any time. The catch is impermanent loss when the two prices move apart (how much).
- Resting orders. Buy and sell orders on the ledger’s order book capture the gap between them when both fill; it is active work, and each order holds 0.2 XRP (limit orders).
- Exchange “earn” programs. The exchange lends your XRP out and pays you part of the interest. You hold a claim on the exchange, not the XRP, and lose it if the exchange fails.
Lending and vaults on the ledger itself are written but not switched on; where the vote stands, and the options side by side: what actually pays on the XRP Ledger.
Questions
- Can you stake XRP?
- No. The XRP Ledger reaches agreement without staking, so there is nothing to stake XRP in. Services offering “XRP staking” are lending it out, or are scams.
- What APY can I expect from XRP Ledger AMM pools?
- Across all pools, last week’s fees came to about 3.9% a year of the XRP deposited; the XRP/RLUSD pool paid 4.1%. Small pools can show far higher figures from a few trades, and every figure changes weekly.
- Is providing liquidity safe?
- There is no contract to be hacked, since pools are part of the ledger, but impermanent loss applies whenever the two assets move apart in price. An XRP/RLUSD pool moves as far as XRP moves against the dollar.