XRP Loans on Ethereum Dominate by Whales Amid Growing Adoption

XRP has become collateral for live dollar borrowing on Ethereum through Morpho, a market backed by FXRP, a tokenized representation of XRP. The market allows XRP holders to mint FXRP, move it to Ethereum, and borrow Ripple's RLUSD stablecoin without immediately selling their XRP exposure.

As of October 1, the outstanding loans on Morpho totaled approximately $7.2 million in RLUSD against about 10.76 million FXRP. However, the market is heavily concentrated among a handful of borrowers, with the three largest addresses accounting for almost all of that debt.

The concentration may be even greater than the address count suggests, as on-chain records identify wallets rather than their owners, so several addresses could belong to the same investor or institution.

Morpho allows lenders to liquidate a position once the value of its debt rises above 77% of the collateral backing it. The three biggest borrowers remain well away from that point, but some smaller borrowers have less room and could reach their liquidation threshold after a decline in the FXRP-to-RLUSD ratio.

The market is expected to be tested as the amendments for native lending on XRP Ledger are undergoing security reviews. If approved, it would allow fixed-term credit to originate on the network rather than requiring XRP holders to mint FXRP and borrow through Morpho.