Flare founder Hugo Philion has proposed a way for XRP holders to use their XRP on the XRP Ledger as collateral, borrow RLUSD through Flare, and receive the RLUSD directly in their XRPL wallet.
The idea would let users “borrow RLUSD against their XRP directly from the XRP Ledger” using Flare Smart Accounts, while keeping the borrowed RLUSD on the XRP Ledger.
However, this would require two things:
- The Wormhole RLUSD bridge must be operational.
- XRP Ledger validators must approve the PermissionDelegationV1_1 amendment.
PermissionDelegationV1_1 would allow XRPL accounts to give another account permission to perform certain transactions without sharing their private keys. This makes it easier to build more flexible account-management and application features.
How the XRP-RLUSD Flow Would Work
Under Philion’s proposal, users will keep their XRP on the XRP Ledger instead of manually moving it between different wallets. Users could represent XRP on Flare as FXRP and use it as collateral to borrow RLUSD. Users can then send the borrowed RLUSD back to their XRP Ledger wallet.
In simple terms:
XRP on XRPL → FXRP on Flare → Borrow RLUSD → Receive RLUSD on XRPL
XRPL validator Vet described Flare as an “extended arm” of the XRP Ledger. In this setup, users deposit XRP on XRPL, receive FXRP on Flare, borrow RLUSD through Morpho, and get the RLUSD in their XRPL wallet without creating a new wallet or account.
The idea builds on Flare’s existing work to connect XRP with Ethereum-based DeFi. Flare has also received approval for an FXRP lending market involving RLUSD, with Morpho providing the lending infrastructure. Flare is developing Smart Accounts that could allow users to authorize the entire process directly from an XRP Ledger wallet.
Honestly, that's a very creative and impressive XRP unlock!
Flare acts as an extended arm for the XRP Ledger here.
Deposit XRP on XRPL -> Flare FXRP -> Borrows RLUSD on Morpho -> Receive RLUSD on XRPL in your wallet.
All that without new accounts or wallets. Even more bullish… https://t.co/PFDS6xsNLI pic.twitter.com/QgZ43yx8ay
— Vet (@Vet_X0) September 16, 2026
Permission Delegation Is Important
PermissionDelegationV1_1 is important because it would allow an XRP Ledger account to let another account carry out certain transactions for it.
The feature uses a DelegateSet transaction to give, change, or remove specific permissions. The authorized account can then make approved transactions without taking control of the original account.
For the feature to go live, XRP Ledger validators must approve the amendment. According to XRPL documentation, it needs more than 80% validator support for two weeks before it can be activated.
For now, PermissionDelegationV1_1 is still going through the validator voting process. This means the proposed Flare lending system depends on the amendment being approved and activated.
Community Reacts to Flare’s XRP Lending Idea
XRP commentator Eri said the proposal builds on infrastructure created through Ripple’s connection with Wormhole.
In simple terms, users could approve the transaction from their XRPL wallet, keep their XRP on the XRP Ledger, and receive RLUSD at the same address. The lending itself would happen through Ethereum-based infrastructure.
Another XRP community member, Krippenreiter, pointed out that users would start and finish the process on the XRP Ledger, while FXRP would represent their XRP on Flare and act as collateral.
This gives XRP holders access to decentralized lending without manually managing several blockchain accounts. For Flare, the proposal would strengthen its role as a link between the XRP Ledger and Ethereum-based DeFi.