Key highlights:
- XRP holders can use wrapped XRP as collateral to borrow RLUSD on Ethereum through a new institutionally reviewed lending market.
- The FXRP market launched with strong early demand as the initial 1 million RLUSD liquidity allocation was fully borrowed within hours.
- Flare is developing a simpler borrowing process that would allow users to initiate the entire transaction directly from an XRP Ledger wallet.
New lending market brings XRP-backed borrowing to Ethereum
XRP holders now have a new way to access liquidity without selling their assets. Flare has introduced support for using wrapped XRP (FXRP) as collateral to borrow Ripple’s RLUSD stablecoin on Ethereum through a new isolated lending market on Morpho Blue.
The market is managed by Sentora, which oversees approximately $280 million in RLUSD liquidity. Before approving FXRP as collateral, Sentora evaluated the asset’s market behavior, oracle infrastructure, liquidity profile, and liquidation mechanisms under its institutional risk framework. The asset will continue to undergo the same ongoing monitoring as other approved collateral within the lending vault.
Unlike broader lending pools, the new market operates as an isolated lending environment. Each Morpho Blue market maintains its own collateral asset, debt asset, oracle, and liquidation parameters. This structure limits potential risk by containing any issues within the FXRP market rather than affecting other lending markets.
Flare co-founder and CEO Hugo Philion said the approval is significant because XRP remains one of the largest cryptocurrencies by market capitalization but has seen relatively limited use in decentralized finance. He added that institutional risk approval for FXRP on Ethereum’s mainnet carries more weight than simply making the asset available through another bridge.
Early demand and future improvements
The lending market saw immediate activity after launch. It opened with a 5 million RLUSD supply cap, with risk clearance already approved to expand capacity to around 9 million RLUSD. Flare initially seeded the market with 1 million RLUSD, and that entire allocation was borrowed within hours, demonstrating early demand for XRP-backed stablecoin liquidity.
Around 150 million FXRP is currently in circulation, with approximately 34.5 million FXRP already being used as collateral on Mystic Finance, Flare’s native Morpho deployment. The new FXRP/RLUSD market differs from Mystic Finance by operating as an institutionally curated Sentora market on Ethereum.
Users currently need to complete several steps before borrowing. They must mint FXRP through Flare’s FAssets system, bridge it to Ethereum via Stargate, deposit it into the lending market, and then borrow RLUSD based on their preferred loan-to-value ratio.
Flare says it is working to simplify this experience through Smart Accounts, which would allow users to authorize the entire process directly from an XRP Ledger wallet. The company is also developing direct XRP Ledger-to-Ethereum minting to further reduce the number of required steps.
FXRP pricing on Flare is secured through the network’s FTSOv2 oracle, while the Ethereum lending market uses Sentora’s ChainlinkOracleV2 pricing infrastructure. To date, approximately 1 million RLUSD has been borrowed against FXRP, providing an early indication of demand for borrowing stablecoins without requiring XRP holders to sell their assets.
The bottom line
The addition of FXRP as collateral expands the ways XRP holders can participate in decentralized finance while maintaining exposure to their holdings. Although the market currently operates with conservative borrowing limits, its strong initial uptake and planned expansion suggest there is growing interest in XRP-backed lending on Ethereum. Future improvements to the user experience could further increase accessibility as the ecosystem develops.
Source:: XRP Holders Gain New Way to Borrow Rlusd on Ethereum Without Selling Their Assets