XRP holders can now borrow Ripple's RLUSD stablecoin on Ethereum without liquidating their holdings, following the approval of Flare's FXRP as collateral in Sentora's RLUSD Main vault on the Morpho lending protocol.

Announced on Monday by layer-1 blockchain developer Flare, the integration marks the first time an XRP-based asset has been accepted as collateral in an institutionally curated Ethereum lending vault. The process allows users to convert XRP into Flare's FXRP token, bridge it to Ethereum, deposit it as collateral on Morpho, and borrow RLUSD. Because the arrangement functions as a collateral-backed loan rather than a sale, borrowers maintain exposure to XRP's price movements while gaining access to dollar-pegged liquidity. XRP has historically had limited penetration in decentralized finance because the XRP Ledger does not natively run Ethereum-compatible smart contracts, leaving XRP largely outside the EVM-based DeFi ecosystem where most lending, borrowing, and yield markets operate. Flare was purpose-built to bridge that divide by bringing smart contract functionality to networks that originated without it.

"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, in a statement. "XRP is now collateral that an institutional risk team underwrites on Ethereum mainnet, which is a stronger form of recognition than another bridge listing."

The model parallels Wrapped Bitcoin (WBTC), which enables Bitcoin holders to participate in Ethereum-based decentralized finance without selling their BTC. Like Bitcoin before it, XRP has long sat as a high-market-cap asset with comparatively little representation in onchain credit markets. FXRP is intended to serve an equivalent function for XRP, opening the door to Ethereum lending markets for XRP holders.

The lending market operates on Morpho Blue, a protocol that uses isolated lending markets designed to contain risk if issues emerge with a specific asset. Sentora stated that it evaluated FXRP's market behavior, oracle design, liquidity, and liquidation mechanics before greenlighting it as collateral.

The launch builds on Ripple's broader push to position RLUSD as an enterprise-grade stablecoin. In August 2024, Ripple began testing RLUSD on Ethereum and the XRP Ledger for cross-border payments. In December 2024, the company secured approval from the New York Department of Financial Services ahead of the stablecoin's official debut. More recently, Mastercard announced it would support settlement of regulated stablecoins, including RLUSD, Circle's USDC, and SoFi's SoFiUSD. Whether FXRP gains traction as collateral beyond Sentora's vault will be a signal of how broadly the Ethereum DeFi ecosystem is willing to absorb XRP-linked assets.

Jesus Rodriguez, co-founder, CTO-CPO of Sentora, wrote on X: "[Sentora] just took a major step to make XRP useful onchain. XRP is one of crypto's largest and most liquid assets. Yet it remains surprisingly underused in onchain credit. That changes today." https://x.com/jrdothoughts/status/2084313030284742781?s=20