XRP as Collateral: How to Borrow RLUSD Without Selling a Single Token

Let it be stipulated that, in case of default, a pound of your beautiful flesh. Holding XRP without ever selling it, while accessing liquidity in dollars: this is the promise that Sentora fulfilled on August 3, by adding FXRP as an eligible collateral in its RLUSD Main vault on Morpho, the lending protocol that today boasts over $11 billion in deposits. Specifically, an XRP holder can now borrow Ripple's stablecoin without parting with their exposure to the token, provided they accept the strict rules of the over-collateralized lending game.
Key points of this article:

• Sentora has introduced FXRP as eligible collateral on Morpho, allowing XRP holders to borrow without selling their token.

• FXRP, the wrapped version of XRP, has been integrated for the first time into an institutional vault on the Ethereum mainnet, marking a breakthrough in DeFi.

FXRP, XRP's Passport to Ethereum DeFi

XRP does not natively operate on Ethereum, where Morpho resides. Therefore, an intermediary is required: FXRP, a "wrapped" version (a token that represents an asset from another chain in a verifiable manner) issued by the Flare network, serves as a gateway. Each FXRP remains backed by a real locked XRP, without a single centralized custodian, an architecture that Flare claims is more robust than traditional wrappings relying on a single custodian.

According to Decrypt, access to the vault remains non-custodial and without a whitelist, with FXRP already serving as collateral on Morpho's Flare version since February 2026. This integration marks its first appearance in an institutional vault on the Ethereum mainnet.

The concerned vault operates according to the logic of Morpho's isolated markets. Each market has its own parameters: the asset lent (here RLUSD), the collateral (FXRP), the oracle that sets the price, and a specific liquidation ratio. If FXRP drops or if the oracle tracking it malfunctions, the damages remain confined to that specific market, without contaminating other vaults of the protocol. An architecture designed precisely to prevent an accident with a single asset from rocking the entire platform.

Over-Collateralized Borrowing: Neither Magic Nor Free

None of this works without excess collateral. Borrowing $100 of RLUSD requires depositing well over $100 of FXRP, a safety margin that protects lenders if the price of XRP suddenly plummets. Crossing the liquidation ratio triggers an automatic and often unfavorable sale of the collateral, exactly the scenario that every DeFi borrower dreads. Thus, the luxury of keeping one's XRP comes at the cost of constant vigilance over one's position.

One detail deserves to be noted before diving headfirst: Ripple, which issues RLUSD, and Flare, which issues FXRP, are both strategic investors in Sentora, the company managing this vault and assessing the quality of the collateral it accepts. Nothing illegal or hidden there, but a curator judging the solidity of an asset issued by its own investors is never a perfectly neutral arbiter. A question to consider before depositing collateral, not after.

Ripple has been pushing RLUSD since its launch at the end of 2024, with BNY Mellon as the custodian of the reserves and an expansion already underway on several Ethereum layer 2s. This new vault joins the broader battle being waged by stablecoins issued by institutional players (RLUSD, USDG, PYUSD) against the historical duo of Tether and Circle. However, the mechanics of cross-chain collateralization, as elegant as it may be on paper, adds an additional layer of technical risk, that of the bridge itself, which every borrower should measure before succumbing to the temptation of easy yield.

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