Flare Bridges XRP's Institutional Settlement to DeFi with FXRP

Flare has launched FXRP, a wrapped version of XRP designed to integrate the asset into decentralized finance (DeFi) ecosystems. This initiative leverages Flare’s FAssets system, which enables non-smart contract tokens like XRP to function as collateralized assets within DeFi protocols. FXRP allows XRP holders to participate in lending, liquidity provision, and staking activities on Flare’s blockchain, expanding the utility of XRP beyond its traditional use casesFAssets | Flare^[1]. The launch marks a strategic step for Flare to position XRP as a bridge between institutional-grade settlement capabilities and decentralized financial applicationsFlare Launches FXRP to Unlock XRP's DeFi Potential^[2].

The minting process for FXRP involves a multi-step mechanism to ensure security and composability. Users initiate the process by sending XRP to a registered agent’s address on the XRP Ledger (XRPL) and paying a collateral reservation fee in FLR (Flare’s native token). Agents then lock collateral—comprising XRP, FLR, stablecoins, or SGB (Songbird’s token)—on the Songbird or Flare network to back the minted FXRP. The system enforces a strict overcollateralization ratio of at least 1.3x to mitigate risks from price volatilityFAssets | Flare^[1]. A Core Vault, introduced in FAssets v1.1, acts as a liquidity reserve, enabling agents to deposit XRP and unlock FLR collateral while ensuring time-locked funds and multi-signature security measures reduce withdrawal risksFAssets | Flare^[1].

Security remains a central focus for Flare. The FAssets system has undergone audits by Zellic and Coinspect, with ongoing bug bounty programs through Immunefi. Additionally, 24/7 monitoring by Hypernative ensures real-time threat detectionFAssets | Flare^[1]. The Core Vault’s design includes escrowed funds and multi-signature signers to limit daily withdrawal volumes, further enhancing trustlessnessFAssets | Flare^[1]. These measures aim to address concerns around cross-chain minting and asset bridging, which have historically posed vulnerabilities in DeFi systemsFlare Launches FXRP to Unlock XRP's DeFi Potential^[2].

To incentivize adoption, Flare is distributing rFLR rewards to liquidity providers on decentralized exchanges (DEXes) supporting FXRP. Pools such as FXRP/USDT on platforms like SparkDEX and BlazeSwap are offering annual percentage rates (APRs) of up to 50%, with plans to expand into collateralized borrowing features as usage growsFlare Launches FXRP to Unlock XRP's DeFi Potential^[2]. The integration of FXRP into DeFi platforms like Enosys and Luminite Wallets facilitates seamless trading and staking, broadening accessibility for XRP holdersFlare Launches FXRP to Unlock XRP's DeFi Potential^[2].

Flare’s roadmap includes further innovations to enhance FXRP’s utility. FAssets v2 will integrate TEE-operated wallet protocols, improving security and accelerating cross-chain transactions through trusted execution environments (TEEs)FAssets | Flare^[1]. Future plans also involve collaborating with projects like Firelight to enable stXRP (XRP staking derivatives) as collateral, creating a diversified ecosystem for yield generationFlare Launches FXRP to Unlock XRP's DeFi Potential^[2]. These developments align with Flare’s vision of transforming XRP into a foundational asset for DeFi, leveraging its existing strengths in fast, low-cost settlementsFlare Launches FXRP to Unlock XRP's DeFi Potential^[2].