XRP has started supporting live dollar borrowing on Ethereum, though this nascent market remains heavily skewed toward a small circle of participants.
As of Oct. 1, a Morpho market powered by FXRP—a tokenized version of XRP—recorded roughly 7.18 million RLUSD in outstanding loans secured by 10.76 million FXRP. Because nearly all that debt stems from just three addresses, the activity cannot be easily interpreted as a sign of widespread adoption.
The marketplace debuted in August via Flare, enabling XRP holders to mint FXRP, bridge it over to Ethereum, and secure Ripple’s RLUSD stablecoin without parting with their underlying XRP exposure.
While this introduces a fresh credit use case for XRP, it simultaneously brings along bridge, redemption, and collateral dependencies that do not exist when holding native XRP outright.
Three borrowers dominate XRP’s emerging credit market
Early borrowing volume is heavily concentrated among a very select group.
The top three addresses account for 93% of the roughly $7.2 million in total outstanding debt, giving a tiny handful of positions disproportionate sway over the market’s scale. A sizable repayment could cause borrowing metrics to drop steeply, whereas a new loan from those same wallets could drive totals upward without drawing in any new users.
Moreover, that concentration may be even tighter than the raw address count indicates. Because on-chain data tracks anonymous wallets rather than distinct identities, multiple addresses could easily be controlled by a single investor or institution.
Liquidity supply is similarly consolidated. Sentora RLUSD Main supplied roughly 8.53 million RLUSD, providing practically all available liquidity to borrowers at the time of observation. Even so, this FXRP market constitutes just 2.03% of Sentora’s wider vault allocations, leaving plenty of headroom to deploy more capital should demand climb.
Under its current limit, Sentora can supply up to 10 million RLUSD. This affords borrowers room to scale up their leverage, though that unused capacity offers little insight into whether a broader cohort of XRP holders will actually participate.
Such concentration could prove critical if the price of XRP begins to drop.
Morpho permits lenders to liquidate positions whenever the value of a loan exceeds 77% of its supporting collateral. The three largest borrowers currently sit comfortably above that threshold. Based on their existing debt levels and collateral pools, the single largest position can absorb roughly a 45% drop in the FXRP-to-RLUSD ratio, while the next two maintain buffers around 38%.
Certain smaller borrowers possess less breathing room. One position holding roughly 121,000 RLUSD in debt against 133,000 FXRP hits its liquidation marker after an approximate 21% decline, presuming the position remains unaltered.
Although the market experienced a few liquidations in September, it registered zero realized or unrealized bad debt as of Oct. 1. A sharper market correction would present a stiffer test, forcing any liquidator who takes over a top position to absorb a substantial block of FXRP all at once.
Such an event would not automatically trigger an immediate sell-off of the underlying XRP. Instead, a liquidator could choose to hold the FXRP, liquidate it on the open market, bridge it back to Flare, or redeem it directly for native XRP.
For the moment, the primary challenge is how swiftly a handful of major wallets can alter the entire market landscape. If fresh borrowers step in to distribute debt across a wider array of addresses, the $7.2 million aggregate would better reflect mainstream demand. Should concentration persist, a solitary large repayment, new loan, or liquidation could radically transform the market overnight.
Native lending could broaden XRP credit without creating new buyers
This heavy concentration on Morpho may turn out to be a temporary phase as developers ready native lending features directly for the XRP Ledger.
The proposed lending framework for XRPL, which is currently undergoing rigorous security evaluations, aims to facilitate fixed-term credit natively on the network. This would bypass the need for XRP holders to mint FXRP, cross-chain it to Ethereum, and utilize Morpho.
Eliminating those extra steps could streamline access to XRP-backed credit and offer institutional players an alternative vehicle for liquidity management and financing. It would also institute a credit framework distinct from Morpho’s overcollateralized design, relying on pre-origination underwriting for fixed-term loans.
Even so, an expansion in lending will not automatically generate fresh demand for XRP itself. Current holders could simply leverage coins they already possess, while institutions could recycle existing stockpiles through these lending markets. Consequently, outstanding debt totals could surge dramatically without a matching rise in unique XRP owners or fresh capital inflows.
This reality elevates borrower composition to a metric as crucial as overall loan volume. If market growth stems strictly from the same heavy hitters scaling up their borrowing, it expands XRP’s utility without proving broad adoption. Conversely, growth distributed among novel borrowers, expanded lending pools, and enduring activity past repayment phases would offer firmer proof that credit is genuinely broadening the asset’s economic footprint.
Native lending is set to provide the next definitive trial. Once the code updates pass security checks and earn validator approval, XRP holders will gain a direct lending pathway right on XRPL to complement the existing Ethereum-based Morpho ecosystem.
Ultimately, this comparison will reveal whether minimizing cross-chain friction succeeds in drawing a diverse borrower base or simply hands existing XRP holders another mechanism to leverage identical capital.