Key facts
- Flare's FXRP token can now be used as collateral on Ethereum's Morpho lending protocol.
- XRP holders can borrow Ripple's RLUSD stablecoin against their FXRP holdings.
- This marks the first time an XRP-based asset is approved as collateral in an institutionally curated Ethereum lending vault.
- Borrowers can access dollar-pegged liquidity without selling their XRP, retaining price exposure.
- Sentora, which operates the vault, approved FXRP after a review of its market behavior and mechanics.
XRP holders can now leverage their holdings to borrow Ripple's RLUSD stablecoin on the Ethereum network without needing to sell their XRP tokens. This development was made possible by Flare's FXRP token being approved as collateral within Sentora's RLUSD Main vault on the Morpho lending protocol.
Announced by Flare, the integration allows users to convert XRP into FXRP, bridge it to Ethereum, and then deposit it as collateral. Borrowers can then access dollar-pegged liquidity while maintaining exposure to XRP's price movements. Flare CEO Hugo Philion highlighted that this addresses the infrastructure gap that has limited XRP's use in decentralized finance (DeFi).
The FXRP token functions similarly to Wrapped Bitcoin (WBTC), enabling XRP holders to participate in Ethereum-based DeFi markets. Sentora, which manages the lending vault, conducted a thorough review of FXRP's market behavior, oracle design, liquidity, and liquidation mechanisms before granting approval. The vault operates on Morpho Blue, which utilizes isolated lending markets to contain potential risks associated with specific assets.
This initiative aligns with Ripple's broader strategy to establish RLUSD as an enterprise-focused stablecoin. Ripple has been testing RLUSD for cross-border payments on both Ethereum and the XRP Ledger, and received approval from the New York Department of Financial Services ahead of its launch. Mastercard has also announced its intention to support the settlement of regulated stablecoins, including RLUSD.