XRP holders have borrowed about $7.2 million in RLUSD against tokenized FXRP collateral through a live Morpho market, but three addresses control 93% of that debt. The concentration means a single large repayment, new loan, or liquidation could swing the market overnight, and even native XRPL lending now in security review may simply let existing holders borrow more rather than bring in new ones.
A Morpho market backed by FXRP, a tokenized representation of XRP, held about 7.18 million RLUSD in outstanding loans against 10.76 million FXRP as of Oct. 1. The three largest addresses accounted for almost all of that debt, limiting how far the activity can be read as broad adoption.
The market launched in August through Flare, letting XRP holders mint FXRP, move it to Ethereum, and borrow Ripple's RLUSD stablecoin without selling their XRP. That adds a new credit use case for the token, but it also introduces bridge, collateral, and redemption dependencies that holders of native XRP do not face.
Three borrowers dominate XRP's emerging credit market
The three largest addresses account for 93% of roughly $7.2 million in outstanding debt, giving a handful of positions outsized influence over the market's size. A large repayment could sharply shrink borrowing, while another loan from the same wallets could lift the total without adding new users.
Funding is similarly concentrated. Sentora RLUSD Main supplied about 8.53 million RLUSD, nearly all of the liquidity available to borrowers at the time observed. The FXRP market represents only about 2.03% of Sentora's broader vault allocations, leaving room to commit more capital. Sentora can supply up to 10 million RLUSD under its current limit.
Liquidation risk concentrated in a few positions
Morpho liquidates a position once its debt rises above 77% of the collateral backing it. Based on current debt and collateral, the largest borrower could withstand roughly a 45% decline in the FXRP-to-RLUSD ratio, while the next two have buffers of about 38%.
Some smaller borrowers have less room. One position with about 121,000 RLUSD of debt against 133,000 FXRP could reach its liquidation threshold after roughly a 21% decline, assuming the position otherwise stays unchanged. The market recorded some liquidations in September but showed no realized or unrealized bad debt as of Oct. 1.
Native lending could broaden credit without new buyers
Developers are preparing to bring lending directly onto the XRP Ledger, an architecture currently undergoing security reviews. It would let fixed-term credit originate on the network rather than requiring holders to mint FXRP, bridge it to Ethereum, and borrow through Morpho.
More lending, however, would not necessarily mean fresh demand for XRP. Existing holders could simply deploy XRP they already own, so outstanding debt could rise substantially without a corresponding increase in the number of XRP owners.
Source: CryptoSlate
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