TL;DR
- Flare CEO Hugo Philion challenged Ripple CTO David Schwartz, claiming he underestimates the real potential of XRP lending.
- Through Protocol Managed Wallets and Flare Confidential Compute, the infrastructure has already channeled $7.2 million in loans backed by 10.8 million Wrapped XRP.
- Ripple’s native model, XLS-66, remains stuck in the validator voting phase, while Flare moves forward with its own solutions deployed externally.
Flare, the blockchain network focused on data interoperability, positioned itself at the center of a technical and strategic debate over the future of XRP lending. Hugo Philion, CEO of the protocol, publicly challenged the claims of David Schwartz, Ripple’s chief technology officer, arguing that he underestimates the scale of external infrastructure that can be integrated into the XRP Ledger to enable passive lending markets.
According to Philion, the XRPL’s native lending protocol, known as XLS-66, remains stuck in the validator voting stage. Faced with that delay, his team developed an alternative solution that does not depend on modifications to the underlying ledger.
@JoelKatz thinks that lending on the XRPL will be big. As incredibly bright as David is – I’d wager that even he is underestimating quite how big it can be! 😉
— Hugo Philion (@HugoPhilion) October 7, 2026
The proposal combines two proprietary components: Protocol Managed Wallets and the Confidential Compute stack. Together, according to the executive, they make it possible to build any application with the desired logic, bringing the XRPL closer to capabilities equivalent to those of native smart contracts.
With this, asset holders could lend directly from their native wallets, eliminating exposure to the risks of cross-chain bridges, one of the most critical vulnerabilities in today’s crypto ecosystem. All fees generated flow toward the FLR token, aligning the protocol’s economic incentive with the growth of these markets.
Flare Puts Its Infrastructure Into Motion
As evidence, Philion pointed to a lending market that Flare has already deployed on external platforms using FXRP, the wrapped version of XRP. The data speaks for itself: investors have already borrowed $7.2 million in the stablecoin RLUSD using 10.8 million wrapped XRP as collateral, while Ripple’s XLS-66 model, designed for off-chain underwriting by Clearpool and Cicada, still awaits approval.
The market, however, shows considerable concentration: just three addresses account for 93% of the debt in Morpho pools, with Sentora providing the liquidity. This figure contrasts with a total RLUSD supply of $2.4 billion, suggesting that potential demand is far from fully materialized.
Philion confirmed that Flare has formal plans to deploy lending directly on the XRPL, without waiting for major ledger updates from Ripple. The strategy aims to program financial logic from its own ecosystem, channeling new flows into its network while Ripple’s native development remains on hold.
