Flare Puts XRP Lending in Focus Alongside Proposed XRPL System

Flare CEO Hugo Philion said the potential scale of XRP lending may be larger than expected, highlighting a split between Flare’s external DeFi infrastructure and a proposed native lending system on the XRP Ledger.

Flare’s current lending products use FXRP, a representation of XRP, as collateral in smart-contract markets outside the XRP Ledger. One such market opened on Morpho, an Ethereum-based lending protocol, with FXRP accepted as collateral in Sentora’s RLUSD Main vault.

Sentora’s RLUSD Main vault held $280 million in deposited RLUSD when the isolated FXRP/RLUSD market launched. A later update listed a $4 million opening cap, a $7.85 million cap, $7.9 million in RLUSD supplied and 10.6 million FXRP used as collateral. The cap and supplied amount describe different market measures.

“XRP is one of the largest assets in crypto and one of the least used in DeFi,” Philion said in the announcement.

Sentora co-founder and CTO-CPO Jesus Rodriguez said the arrangement was designed to bring XRP into onchain credit markets.

“By enabling FXRP as collateral in our RLUSD vaults, we are bringing that scale into DeFi and expanding the productive utility of XRP across onchain credit markets,” Rodriguez said.

Flare’s Protocol Managed Wallets can operate wallets on external blockchains under protocol rules and currently support the XRP Ledger. Flare’s Confidential Compute system can support programmable off-chain processing and Protocol Managed Wallets.

The approach differs from XLS-66, the proposed XRP Ledger lending protocol. XLS-66 would use single-asset vaults to fund fixed-term, uncollateralized loans, with underwriting and risk management handled outside the ledger.

The XRP Ledger Standards registry identifies the formal amendment as XLS-0066, a draft dated Oct. 18, 2024. The proposal has not been activated on mainnet. A planned Clearpool product is labeled “Coming soon” and is described as an institutional credit platform using XLS-65 vaults and XLS-66 lending.

The two systems would place XRP lending in different environments: FXRP markets use external smart-contract infrastructure, while XLS-66 would make lending a native XRP Ledger function if activated. Flare says future Smart Accounts and Protocol Managed Wallets could reduce the number of steps required for XRP holders.