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.