XRP holders can now borrow Ripple's RLUSD stablecoin on Ethereum using FXRP as collateral, without selling their tokens.
Key Points
- Flare's FXRP is now accepted as collateral in Sentora's RLUSD vault.
- XRP holders can borrow Ripple's RLUSD stablecoin on Ethereum without selling their XRP.
- This is the first time an XRP-based asset is accepted as collateral in an Ethereum lending vault.
XRP holders can now borrow Ripple's RLUSD stablecoin on Ethereum without liquidating their XRP tokens, thanks to Flare's FXRP being approved as collateral in Sentora's RLUSD Main vault.
This integration, revealed by Flare on Monday, allows users to convert XRP into FXRP, transfer it to Ethereum, and use it to secure loans in the Morpho lending protocol, all while retaining their XRP holdings. This model enables borrowers to access dollar-pegged liquidity while still benefiting from any price movements in XRP.
Hugo Philion, co-founder and CEO of Flare, noted that XRP is a significant asset in the crypto space that has yet to be fully utilized in decentralized finance (DeFi) due to infrastructure gaps. He emphasized that XRP's acceptance as collateral on the Ethereum mainnet signifies a substantial form of recognition.
Similar to Wrapped Bitcoin (WBTC), which allows Bitcoin holders to leverage their assets in Ethereum's DeFi ecosystem, FXRP aims to provide XRP holders with access to Ethereum lending markets without the need to sell their tokens.
The lending market operates on Morpho Blue, which features distinct lending markets designed to minimize asset-specific risks. Before approving FXRP, Sentora conducted a comprehensive assessment of its market dynamics, oracle design, liquidity, and liquidation strategies.
This development aligns with Ripple's strategy to establish RLUSD as a stablecoin for enterprises. In August 2024, Ripple began testing RLUSD on both Ethereum and the XRP Ledger for cross-border transactions, and by December 2024, it secured approval from the New York Department of Financial Services for the stablecoin's launch. Mastercard has also recently shown support for the settlement of regulated stablecoins, including RLUSD.
Jesus Rodriguez, Co-Founder and CTO-CPO of Sentora, commented on X, stating that this is a significant advancement in making XRP functional on-chain, highlighting its potential as one of the largest and most liquid assets in crypto.
