XRP Gets DeFi Lending Legs with $280M RLUSD Vault Approval

XRP, the fourth-largest cryptocurrency by market cap at around $70 billion, has been largely invisible in decentralized finance (DeFi) lending. However, a recent development may change this.

On August 4, Flare announced that its wrapped version of XRP, FXRP, had been approved as collateral inside one of the biggest stablecoin vaults on Ethereum, Morpho Blue. This means that XRP holders can now wrap their tokens into FXRP and borrow RLUSD, Ripple's dollar-pegged stablecoin.

This is significant because it marks the first time any XRP-based asset has been accepted as collateral inside an institutionally managed Ethereum lending market. The vault uses Morpho Blue's isolated market structure, which keeps each collateral type in its own sandbox, reducing the risk of damage spreading to other assets if something goes wrong with FXRP.

The approval is also notable because it addresses one of the main reasons XRP has been a DeFi ghost: its native ledger does not support smart contracts that power Ethereum-based lending protocols like Aave or Compound. To use XRP in DeFi, holders have had to leave their native chain, but with Flare's FAssets system, this is now possible in a clean and non-custodial way.