Crypto analyst Iso Ledger has warned investors and holders of XRP to take a closer look before depositing funds into earnXRPa new yield product linked to Upshift and the Flare Network. While others discuss the possibility of winning stable passive income Thanks to this new system, Iso Ledger is exercising more caution. In a recent analysis, the analyst explained what happens when a holder deposits their XRP, focusing on fees, expected returns, and risks involved.
EarnXRP shows slow returns and high fees
In an X post from April 29, Iso Ledger explain that while EarnXRP may seem attractive and profitable at first, the yield system is riddled with problems that delay actual returns and introduce high costs for XRP Holders. The analyst showed that before any return is achieved, users are already losing part of their XRP due to multiple fees built into the process.
To show this, Iso Ledger has broken down each step that occurs and the exact costs involved when holders deposit 1,000 XRP. He noted that the process begins with converting XRP into FXRP, a wrapped version on the Flare network. He said that simply converting XRP to FXRP results in a slight fee reduction of around 0.5-1%.
After that, users must deposit their 1,000 XRP into the Upshift vault, which incurs additional fees, leaving them with only 993 FXRP. On top of that, there are network and service fees of around 1.149875 XRP. Additionally, when it’s time to exit, users also face a surrender fee of around 0.5%. In total, the total round trip cost comes to around 13 XRP on a 1,000 XRP deposit.
Iso Ledger compared this cost to expected return for EarnXRP. While the vault claims to target returns of up to 10%, it noted that a more realistic estimate placed profits at just 4% per year. This would mean that users would only earn around 40 XRP per year on a deposit of 1,000 XRP. Based on this, the analyst said it would take holders around four months just to recoup the initial fees before making an actual profit.
Iso Ledger also noted that increasing the size of the deposit does not change this result. Whether a user deposits 1,000 or 10,000 XRP, the fee percentage remains the same. He also added that the break-even time frame remains unchanged and larger deposits still face the same time frame before users make a profit.
Risks related to EarnXRP smart contracts and system structure
Beyond fees and potential returns, Iso Ledger highlighted several risks associated with EarnXRP. He explained that the system runs on smart contracts, which can sometimes contain bugs or be targets of hackers and bad actors. He also highlighted the risk of fleeting loss, where changes in market conditions can cause the value of a user’s funds to drop while they are stuck in the system.
Iso Ledger also noted that EarnXRP carries business risks when users borrow and deploy assets in the markets. If the price gap between these markets narrows, returns may fall. To top it off, withdrawals on EarnXRP can take up to 72 hours, meaning users may not be able to access their funds quickly enough.
He raised another concern, noting that because FXRP is a wrapped asset, it relies on a bridging system. Iso Ledger claimed this dependency adds another layer of risk for XRP holdersbecause bridges are known weak points in cryptographic systems. This concern echoes past incidents like the Kelp DAO exploitwhere over $290 million in reinvested Ether was stolen after a hacker exploited weaknesses in the rsETH bridge used by the protocol.
Additionally, Iso Ledger added that after publicly auditing Upshift a week ago and sending five questions, only one response has been provided so far, “on this topic,” demonstrating a lack of clear communication and transparency. He said he preferred to wait XLS-66d, an upcoming update which could offer similar yield options directly on the XRP Ledger without the need for wrapped assets or bridges.
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