Flare blockchain, which enables the use of $XRP in decentralized finance, has made its wrapped token version eligible as collateral by Sentora, the company managing a $280 million lending pool based on Ripple's $RLUSD stablecoin.
Borrowers can now deposit wrapped $XRP, called FXRP, and borrow $RLUSD against it as collateral.
This innovation opens an isolated FXRP/$RLUSD market on the Morpho Blue platform, where holders can take out loans against $XRP collateral instead of selling the tokens. Access is permissionless and does not require whitelisting.
Prior to approval, Sentora's team conducted an analysis of FXRP market dynamics, oracle design, liquidity, and liquidation capacity as part of their institutional risk assessment framework. The asset will subsequently undergo continuous monitoring, as do other collateral assets in the vault.
To use the new option, users need to create FXRP via Flare's FAssets system, bridge it to Ethereum via Stargate, deposit it on the market, and take out loans at their chosen loan-to-value ratio. The Flare team states that it is developing a route via smart accounts, which will allow holders to authorize the entire sequence of actions from an $XRP Ledger wallet, and direct conversion from XRPL to Ethereum is also being developed.
Flare Co-founder and CEO Hugo Philion stated that $XRP is one of the largest assets in crypto and one of the least utilized in DeFi. In his opinion, having an institutional risk management team ensuring its placement on the main Ethereum network means more than just another bridge listing.
Each Morpho Blue market has its own collateral asset, debt asset, oracle, and liquidation threshold, so any issues within the FXRP market remain contained within it and do not affect the rest of the vault.
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