XRP holders have long had limited ways to unlock liquidity without selling their tokens. Flare is aiming to change that.
The Layer 1 network has integrated FXRP into Sentora's RLUSD Main vault on Morpho, allowing users to borrow Ripple's RLUSD stablecoin against XRP-backed collateral on Ethereum.
According to Flare, it marks the first time a representation of XRP has been approved as collateral in an institutionally managed lending vault.
Sentora's RLUSD Main vault currently holds around $280 million in deposits, making it the largest institutionally curated RLUSD lending pool on Ethereum.
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Bringing XRP Into DeFi Lending
The launch creates a new borrowing market built on Morpho Blue, where users can mint FXRP through Flare's FAssets protocol, move it to Ethereum and use it as collateral to access RLUSD without selling their XRP.
That means XRP holders can unlock stablecoin liquidity while maintaining exposure to the underlying asset, something that has historically been difficult because XRP has had limited integration across Ethereum-based lending markets.
"XRP is one of the largest assets in crypto and one of the least used in DeFi. That gap came down to infrastructure," said Hugo Philion, Co-founder and CEO of Flare.
"FXRP closed part of it by making XRP programmable. This closes another part. XRP is now collateral that an institutional risk team underwrites on Ethereum mainnet, which is a stronger form of recognition than another bridge listing."
Institutional Backing
Before approving FXRP, Sentora evaluated the asset under its institutional risk framework, reviewing factors including market behaviour, liquidity, oracle design and liquidation mechanisms.
The company, which oversees more than $2 billion in institutional DeFi assets, said adding FXRP expands the types of collateral available across on-chain credit markets.
"XRP is one of the largest and most liquid digital assets in the market," said Jesus Rodriguez, Co-founder and CTO-CPO of Sentora.
"By enabling FXRP as collateral in our RLUSD vaults, we are bringing that scale into DeFi and expanding the productive utility of XRP across on-chain credit markets."
A New Source of RLUSD Liquidity
The market launches with conservative borrowing limits that can be expanded as liquidity and adoption grow.
Borrowers first mint FXRP on Flare before bridging it to Ethereum, where it can be deposited into the isolated FXRP/RLUSD lending market on Morpho Blue. Interest rates adjust dynamically based on utilisation, while collateral positions remain subject to liquidation thresholds.
Flare says it is also working to simplify the process.
Future updates will allow users to initiate the entire transaction directly from an XRP Ledger wallet through Flare Smart Accounts, with the protocol automatically handling FXRP minting, bridging and collateral deployment behind the scenes. Direct FXRP transfers from XRPL to Ethereum are also in development, removing the need for a separate bridging step.
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Expanding XRP's Role
XRP remains one of the largest cryptocurrencies by market capitalisation, yet its presence across decentralised finance has lagged behind assets such as ETH and BTC because of limited smart contract functionality and lending integrations.
By securing approval from an institutionally managed RLUSD vault, Flare is positioning FXRP as infrastructure that can connect XRP liquidity with Ethereum's growing DeFi ecosystem.
If adopted more broadly, the integration could give XRP holders another way to put dormant assets to work without exiting their positions, while giving institutional lenders a new form of collateral backed by one of crypto's largest assets.
Reporting by Lidia Yadlos
