Key Highlights
- XRP holders can now use FXRP as collateral to trade XRP options and perpetual futures on Derive.
- FXRP brings XRP into DeFi, allowing holders to use their XRP exposure without depositing the underlying tokens on a centralized exchange.
- FXRP gained another DeFi use case after being approved as collateral for borrowing RLUSD through Morpho.
XRP holders can now use Flare’s FXRP as collateral to trade XRP options and perpetual futures on the decentralized exchange Derive.
According to an announcement on Thursday, the integration gives XRP holders another way to use their holdings in decentralized finance without depositing XRP on a centralized exchange.
The setup works through FXRP, a token that represents XRP on the Flare blockchain. XRP holders can mint FXRP through Flare’s FAssets system and deposit it into a Derive Portfolio Margin V2 account. They can use FXRP as collateral while trading derivatives.
Why FXRP is needed for DeFi
The integration addresses a limitation faced by XRP holders. XRP runs on the XRP Ledger, while many DeFi applications are built on smart-contract networks. That has limited the ways XRP can be used across some DeFi protocols.
Flare’s FAssets system is designed to connect assets from networks without native smart-contract functionality to DeFi applications. FXRP represents XRP on Flare, allowing the asset to be used in applications built for programmable finance.
In simple terms, FXRP gives XRP a way to move into DeFi activities while the original XRP remains linked to the XRP Ledger.
Flare expands the FAssets system
Flare has been working to expand the use of FXRP before the latest Derive integration.
Last year, the company made FAssets v1.1 available on the Songbird network as part of an upgrade aimed at improving the utility and scalability of FXRP. A key part of the upgrade was the Core Vault, which lets users reuse locked collateral and remove some limits around minting FAssets. The system also supported the wider goal of bringing assets such as XRP into DeFi.
FAssets are designed to connect tokens from networks that do not support smart contracts with DeFi applications. XRP was the first asset added under the revised framework. The v1.1 update also allowed agents to deposit XRP into a Core Vault directly on the XRP Ledger.
What can traders do with XRP options?
The Derive integration gives FXRP another use beyond holding or transferring the asset. Users can use it as collateral for XRP options and perpetual futures. Options allow traders to buy or sell an asset at an agreed price. Perpetual futures are contracts that let traders take positions on an asset’s price without a fixed expiry date.
On Derive, XRP holders can use the products for activities such as hedging or taking directional positions on XRP. Options sellers can also use the platform to receive premiums, subject to the risks associated with derivatives trading.
“Options are often the last major market to develop around an asset,” Derive founder and CEO Nick Forster said. He added that FXRP allows XRP holders to use their capital onchain for hedging, earning premiums, and trading.
FXRP gets another DeFi use case
The Derive integration follows another recent expansion of FXRP’s use in DeFi. On August 3, Flare announced that FXRP had been approved as collateral for Sentora’s RLUSD lending vault on Morpho. That setup allows users to borrow RLUSD against FXRP instead of selling their XRP holdings.
The two integrations give FXRP separate uses across DeFi: borrowing against the token through Morpho and using it as collateral for XRP derivatives on Derive.
For XRP holders, the latest integration expands the ways the asset can be used in DeFi without requiring the underlying XRP to be deposited on a centralized exchange.
Also Read: Evernorth Ties Share Issuance to XRP Value in Deal Revision
