Schwartz and Flare Clash Over XRP Ledger Lending
Schwartz mainly sees room in the native XRPL tools, while Flare is already tapping into DeFi demand with RLUSD and FXRP. The debate centers on XLS-66 and XRP's role as collateral.
Key Takeaways
- David Schwartz and Hugo Philion disagree on how big XRP Ledger lending could get.
- XRPL lending is not live yet; validators are still voting on proposal XLS-66.
- Through Flare, $7.95 million in RLUSD has already been borrowed against 10.8 million wrapped XRP.
A debate over XRP Ledger lending is shaping the conversation around one of XRP's next big features. Ripple CTO Emeritus David Schwartz and Flare CEO Hugo Philion disagree on how large that market could become, while the native tools on the XRP Ledger are not live yet.
Lending on XRPL
XRP Ledger lending is meant to become a native feature that lets users borrow and lend assets directly on the blockchain. Validators are still voting on XLS-66, the proposal behind this feature. XRPL Commons said in the meantime that lending is almost live and also hosted a hackathon in New York with separate tracks for borrowing and lending.
Schwartz said nothing has been built around the feature yet, which means early developers still have a lot of room, in his view. He called lending one of the most important needs in any financial system and sees the main value in using the existing tools on the ledger.
Flare Sees More Room
Philion responded that Schwartz is very sharp, but may be underestimating how big lending can get. According to him, many people are not paying enough attention to infrastructure outside the XRP Ledger that can still connect with XRPL. Flare therefore wants to roll out the lending logic on its own side instead of waiting for major upgrades to XRPL.
To do that, the company uses Protocol Managed Wallets and the Flare Confidential Compute stack. The goal is to make nearly full smart contracts possible, while holders can borrow from native XRPL Wallets without the risks of traditional cross-chain bridges. The yields would stay within the Flare ecosystem.
Signals From the Market
There are already early signs of demand. Through Flare, $7.95 million of Ripple's RLUSD stablecoin has been borrowed against 10.8 million wrapped XRP, or FXRP. Three addresses hold about 93% of that debt in Morpho pools, while Sentora provides the liquidity. That concentration makes it clear the numbers are still limited, but it does show there is already interest before native lending on XRPL is active.
The broader context is that Flare has long been building DeFi services for XRP, including through its XRPFi initiative. For European crypto followers, the key point is that this shows how XRP can be used not just as a payment asset, but also as collateral and a lending asset. If native lending on XRPL moves forward, it could broaden XRP's role in DeFi even more, although it is still unclear how fast that will happen.
Also, using XRP as collateral for RLUSD shows that Flare had already built a bridge between XRP and lending markets outside the XRP Ledger earlier.
