Key Points
- Flare's FXRP is now recognized as collateral in Sentora's RLUSD vault on Morpho.
- XRP holders can borrow Ripple's RLUSD stablecoin on Ethereum without liquidating their XRP assets.
- This marks the first instance of an XRP-based asset being accepted as collateral in a lending vault curated for institutional use on Ethereum.
XRP holders now have the opportunity to borrow Ripple's RLUSD stablecoin against their assets on Ethereum without the need to sell their XRP tokens, following the approval of Flare's FXRP as collateral in Sentora's RLUSD Main vault.
This integration, announced by Flare on Monday, enables users to convert XRP into the FXRP token, transfer it to Ethereum, use it as collateral on the Morpho lending protocol, and subsequently borrow RLUSD. This setup allows borrowers to maintain their exposure to XRP's price while still accessing liquidity pegged to the dollar, as the loan is secured by collateral instead of a sale.
“XRP is one of the largest assets in crypto and one of the least utilized in DeFi. That gap came down to infrastructure,” stated Hugo Philion, co-founder and CEO of Flare. “XRP is now collateral that an institutional risk team underwrites on Ethereum mainnet, which is a stronger form of recognition than another bridge listing.”
This model is comparable to Wrapped Bitcoin (WBTC), which allows Bitcoin holders to utilize their BTC in Ethereum-based decentralized finance without selling it. FXRP aims to provide similar access for XRP holders to the Ethereum lending markets.
The lending market operates on Morpho Blue, which features isolated lending markets to mitigate risks associated with specific assets. Sentora conducted a thorough review of FXRP's market behavior, oracle design, liquidity, and liquidation processes before its approval as collateral.
This initiative builds on Ripple's efforts to position RLUSD as a stablecoin targeted at enterprises. In August 2024, Ripple commenced testing RLUSD on both Ethereum and the XRP Ledger for cross-border transactions. By December 2024, the company obtained approval from the New York Department of Financial Services in anticipation of the stablecoin's launch. Recently, Mastercard announced its support for the settlement of regulated stablecoins, including RLUSD, Circle's USDC, and SoFi's SoFiUSD.
“[Sentora] just took a major step to make XRP useful onchain,” remarked Jesus Rodriguez, Co-Founder and CTO-CPO of Sentora, in a post on X. “XRP is one of crypto’s largest and most liquid assets. Yet it remains surprisingly underused in onchain credit. That changes today.”