A guide to XRP yield
Flare is building the most robust DeFi infrastructure for XRP by turning it into a composable, DeFi-ready asset. Historically, XRP has long been one of the most liquid and widely adopted cryptocurrencies, powering real-world payment and liquidity solutions.
Now, through Flare, that same liquidity can be put to work in DeFi. Through FAssets, XRP can be represented on Flare as a DeFi-ready token, usable in lending, trading, liquidity provision, and other on-chain financial activities across a range of protocols. This expands XRP’s utility while maintaining its core strengths of speed and reliability.
As XRP holders increasingly use Flare to participate directly in DeFi, a commonly asked question is: Where does XRP yield actually come from?
This guide explores the source of XRP yield, how Flare makes those mechanisms possible on-chain, and yield strategies available now (and those on the way).
Where does XRP yield come from?
Unlike proof-of-stake networks, XRP doesn’t generate native staking yield. Instead, yield comes from how the asset is used as capital, similar to how non-staking assets like Bitcoin generate returns through lending, options, or structured strategies.
Through Flare’s infrastructure, these same yield mechanisms can exist on-chain, supported by both emerging DeFi protocols on Flare — like Firelight — and broader ecosystem integrations. For instance, structured yield platforms like Doppler and interoperable products like mXRP show how these models are taking shape across the broader DeFi landscape. Meanwhile, Flare-native solutions like Firelight explore new ways to underwrite risk directly on Flare.
Broadly speaking, all XRP yield strategies from the existing protocols/ platforms follow the same principle, which is to put XRP to work as productive capital, generate profits and give them back to XRP depositors as yield. The ways to generate profits can generally be grouped into three categories:
- Options strategies
- Delta-neutral strategies using borrowed collateral
- Insurance underwriting
1. Options Strategies
XRP has one of the strongest options markets in crypto, behind BTC, ETH, and SOL. With expanding institutional interest, including a future potential CME listing and CME offering 24/7 coverage, options-based yield strategies for XRP are expected to grow over time. This creates even more opportunities for yield-based strategies.
How it works:
When you underwrite options, you’re selling contracts that give other traders the right to buy or sell XRP from you at a certain price. They pay you a premium for that right — that premium is your yield.
For example, one approach is an out-of-the-money (OTM) covered call spread, where traders can sell options slightly above the current price of XRP in order to earn premiums while maintaining exposure to XRP’s upside. Note that this strategy is not completely risk-free. The trade-off here is that during periods of high volatility, the trader’s options could be exercised — this would require the trader to sell XRP at the agreed price.
Although it isn’t risk-free, these outcomes can be mitigated and managed through insurance funds that ensure all exercised options are always covered.
Platforms like Doppler are exploring how to bring these types of structured products on-chain, which would allow users to participate in yield strategies with more clarity and transparency through decentralization. It also illustrates how similar yield opportunities could be integrated within the Flare ecosystem.
2. Delta-neutral strategies using borrowed collateral
Another way to generate yield on XRP is through delta-neutral strategies, where XRP is used as collateral to borrow stablecoins that are then deployed into yield-generating trades that aim to outperform the borrowing cost.
As an example, let’s say a user posts their XRP as collateral to borrow stablecoins at a 4% rate through a prime broker, exchange, or on-chain protocol. To turn a profit, the user would need to earn more than 4% from the strategy they’re using for a net positive yield on their original XRP collateral. This is a standard strategy in use by many of the Bitcoin funds that have a mandate for delivering bitcoin yield.
Most often, this type of strategy happens on centralized exchanges (CEX), where the CEXes give the Bitcoin funds a line of credit to trade with for providing collateral. A common example of this is called a basis trade. In a basis trade, fund managers will spot buy XRP while shorting the perpetual contract of that asset. This position allows the fund to collect the positive funding rate paid by perpetual contract holders, capturing a steady yield as long as the market remains balanced. Basis trades have been made popular by projects like Ethena and Resolv, who are running these strategies to deliver yields for their stablecoins.
Alternatively, there are on-chain farming opportunities on specialized chains like Plasma, which is building native yield markets optimized for stablecoins that can eclipse borrowing costs and accelerate yield growth.
3. Insurance underwriting
A third source of XRP yield comes from staking and underwriting, which the upcoming Firelight protocol combines into a unified model.
Firelight also introduces a system called Economically Secured Services (ESS), where blockchain apps pay fees to borrow the economic security provided by staked FXRP. Stakers and underwriters earn a share of these ESS fees, which creates a new source of yield that is tied directly to network activity rather than inflation or trading spreads.
Together, this structure blends staking-like rewards with underwriting-based incentives, allowing XRP holders to earn from securing services while maintaining flexibility through stXRP. As part of Flare’s broader ecosystem, Firelight complements systems like Flare’s FAssets bridge, which brings XRP on-chain for use across Flare DeFi protocols. Both contribute to making XRP a productive, yield-generating asset on Flare.
Flare's Roadmap
As a part of building the most robust DeFi ecosystem possible, Flare aims to bring all viable options for yield generation on-chain, giving users a range of transparent, composable options suited to their t risk and reward preferences.
And through integrating FAssets and Firelight, Flare provides a unified foundation for decentralized yield generation. While many of these strategies have traditionally been executed off-chain or via CEXes, Flare’s infrastructure can bring them on-chain in a way that is transparent, secure, and composable. The result is to enable XRP to evolve from a transactional asset into productive capital that powers real economic activity on and beyond Flare’s DeFi ecosystem.