RESOLVING THE LEDGER
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Flare, the blockchain that lets XRP be used in decentralized finance, told CoinDesk on Monday that its wrapped version of the token has been accepted as collateral by Sentora, which manages a $280 million lending pool of Ripple's RLUSD stablecoin.
Borrowers post the wrapped XRP, called FXRP, and take out RLUSD against it.
The approval opens an isolated FXRP/RLUSD market on Morpho Blue where holders can borrow against XRP exposure rather than sell it. Access is permissionless with no whitelist required.
Sentora reviewed FXRP's market behavior, oracle design, liquidity and liquidation capacity under its institutional risk framework before signing off, and the asset will face the same ongoing monitoring as other collateral in the vault.
Getting there takes several steps as of Tuesday. Users mint FXRP through Flare's FAssets system, bridge it to Ethereum via Stargate, deposit it into the market and borrow at their chosen loan-to-value ratio. Flare says it is building a route through Smart Accounts that would let holders authorize the whole sequence from an XRP Ledger wallet, with direct XRPL-to-Ethereum minting also in development.
Flare co-founder and CEO Hugo Philion told CoinDesk that XRP is one of the largest assets in crypto and one of the least used in DeFi, and that having an institutional risk team underwrite it on Ethereum mainnet counts for more than another bridge listing.
The isolated structure is what makes the approval possible. Each Morpho Blue market carries its own collateral asset, debt asset, oracle and liquidation threshold, so a failure in the FXRP market stays inside it rather than reaching the rest of the vault.
Scale is the open question, however. Roughly 155 million FXRP has been minted since launch against Philion's stated target of drawing 5 billion XRP into Flare's ecosystem over six months, and the new market opens with what Flare describes as a “conservative supply cap” that may rise as usage grows.
CoinDesk has reached out to Flare and Sentora for the supply cap, loan-to-value ratio, liquidation threshold and oracle source, and will update with any response.
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