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The majority of my rug hooking projects use 100% wool black yarn for the edges. The edge is a great way to bring out features of the piece itself. I've been learning punch needle, and have found that rather than keep the hoop plain on the finished piece, I've taken to matching the yarn to the project.
First, tighten the backing in the hoop, and then cut off the backing as close to the hoop edge. I used grip edge embroidery hoops to ensure that the backing stays in place (found here). If the hoop isn't tight there's a chance the backing will fall out before it's been whipped and the piece would be difficult to save.
Using the same or a similar color to the yarn in the project. whip the edge by going around the hoop, getting as close to the punched piece as possible.