An Introduction to XRP DeFi

XRP is one of the prominent cryptocurrencies, with a nearly $128 billion market cap that makes it the second largest non-smart contract crypto after Bitcoin. Known for its fast, low-cost transactions, XRP has long played a key role in enabling efficient value transfer across borders. XRP’s value to retail and institutional users is clear, but the next step is figuring out how to expand that value with decentralized finance (DeFi). 

2025: The tipping point for XRP

There’s growing interest from both institutional and retail investors for secure, efficient, and regulated exposure to XRP for use in DeFi. Much of this momentum is tied to recent bullish headlines, from the SEC halting the Ripple lawsuit, to Ripple’s stablecoin RLUSD breaking $300 million in market cap, as well as the continued speculation around XRP ETFs. XRP is positioned well for even more massive growth.

Unleashing the full potential of XRP, however, requires infrastructure; one that offers XRP holders safe, efficient ways to earn double-digit yields, stake, lend, and trade. DeFi is the key.

A DeFi ecosystem that XRP deserves

The XRP Ledger (XRPL) was built for speed and efficiency in payments, which it excels at. However, the XRPL architecture does not have the built-in features critical for complex DeFi activities such as smart contracts, lending, borrowing, or the deployment of DEXs. While there are existing DeFi solutions, choices are limited because XRPL is not a truly composable chain that supports EVM or newer smart contract languages.

XRP holders should have access to a wider selection of DeFi-enabled financial tools. For instance, there’s only one AMM live on XRPL, when a holder of XRP—the fourth biggest market cap cryptocurrency—should have a suite of options to choose from.

To expand XRP DeFi to unlock its full, latent potential, the network must connect to a broader, composable blockchain ecosystem such as Flare.

Flare: A home for XRPFi

Flare is an EVM-compatible Layer 1 network that was designed for interoperability. Through Flare’s enshrined data protocols, Flare allows non-smart contract assets like XRP to be used trustlessly in DeFi. Flare has been committed to building this vision of XRP DeFi (XRPFi) since day one — to create an ecosystem that will empower XRP to reach its maximum potential as a powerful financial instrument in the cryptosphere. Today, all the tools needed to fully realize XRPFi are in place.

Stablecoin liquidity on Flare

Stablecoins, especially ones trusted already in the blockchain space, have been instrumental in taking this growing interest and turning it into actual capital deployment and liquidity provision. Because stablecoins act as “cash equivalent” assets with DeFi ecosystems, they’re widely available and increasingly interoperable. And today, they’re becoming foundational to opening pathways to more XRP utility. 

USD₮0, an omnichain stablecoin backed 1:1 by Ethereum-based USDT, is now available natively on Flare thanks to LayerZero’s Omnichain Fungible Token (OFT) standard. It brings a gas-free, secure, and highly composable source of capital to Flare’s DeFi ecosystem. Unlike traditional wrapped stablecoins, USD₮0 uses the OFT standard to move natively, securely, and more seamlessly across chains—eliminating the need for custodial bridges and reducing friction. USD₮0 has already been gaining traction with some of the largest chains, including Optimism and Arbitrum. It’s also increasingly available on cryptocurrency exchanges, which offers a simpler on and off-ramp experience for users.

By pairing XRP with USD₮0, users can create deep, stable trading pools, offer collateral for loans, and tap into the $140 billion of USDT stablecoin liquidity that exists today. USD₮0 can essentially serve as the capital base for XRPFi, unlocking:

• Liquidity provision
• Efficient trading
• Perpetuals trading
• Borrowing & lending 
• Double-digit yield opportunities

All of these opportunities are now available directly to XRP users with an enhanced liquidity environment with USD₮0. In fact, without the liquidity and interoperability of a stablecoin like USD₮0, a true DeFi ecosystem can’t be built.

DeFi is accelerating on Flare

Flare has experienced a surge in momentum, with its stablecoin market cap growing by an impressive 1600% during the past week — with $60 million of USD₮0 minted in just a few days. This rapid growth closely tracks the sharp rise in TVL, which has now surpassed $85M, marking the highest month-over-month increase across the ecosystem. Zooming out farther, between February 2024 to February 2025, Flare TVL grew over 400% year-over-year. 

Flare also integrates with popular XRPL-compatible wallets like Bifrost and Oxenflow, giving XRP holders seamless access to DeFi through familiar tools they already trust.

Composability via FAssets

Flare’s FAssets protocol brings XRP and other non-smart contract assets like BTC and DOGE onto Flare in a trustless, decentralized way, enabling their use case across the full range of DeFi applications. Through this system, XRP is represented as FXRP, a tokenized version of XRP that unlocks smart contract functionality. Once an asset like XRP is EVM-compatible (as FXRP), it can effectively be integrated into every DeFi protocol on Flare — this turns XRP into a fully DeFi-ready asset. 

With the FAssets v1.1 update, the system further expands liquidity and opens the door to unlimited minting of FAssets as more collateral flows in. This unlocks not just composability, but participation in new DeFi sectors like restaking, one of the fastest-growing markets coming soon to Flare. Importantly, FAssets and restaking don’t work in isolation — they depend on accessible, deep liquidity to power user participation across protocols.

Tying it all together: the XRPFi Flywheel

Each of the above pieces comes together to create a robust DeFi ecosystem around XRP, which we can refer to as the XRPFi Flywheel. 

Here is a simplified wrap-up of how the above elements connect to empower XRPFi:

• USD₮0 provides the capital base
• FXRP brings composability
• Pairing USD₮0 with FXRP → Deeper liquidity
• Deeper liquidity → More efficient markets
• More efficient markets → More DeFi activity
• More DeFi activity → More yield & real XRP use cases

This is XRPFi, and Flare is the engine.

The next chapter for XRP

With the launch of USD₮0, FAssets, and the growing ecosystem of DeFi protocols on Flare, XRP is no longer bound by technical constraints of its original design. XRP holders — both institutional and retail — can now access deep, interoperable liquidity and a wide range of DeFi opportunities. This is particularly significant for big players like institutions that already hold large amounts of XRP sitting idly. 

The next stage for XRP goes beyond providing additional utility; it’s a chance for XRP holders to help build both the foundation and the future of XRPFi.