An alternative method to equip XRP with DeFi functionality, while avoiding the risks associated with conventional blockchain bridges, has been introduced by Flare.A significant upgrade enabling the use of actual XRP (XRP) tokens in DeFi was launched by Flare (FLARE). On Wednesday, May 14, Flare’s FAssets were introduced on Songbird, allowing non-smart contract assets to be brought into the DeFi space, as stated in a note shared with the crypto community.
Complex DeFi operations involving assets like Bitcoin and Dogecoin will be made possible through the network. XRP will be the initial asset accessible on the platform, as its linked Core Vault has been activated on the XRP Ledger.
Core Vaults serve as a system through which assets like Bitcoin or XRP are connected to smart contract platforms, without the need for users to relinquish control of their holdings. After the collateral is secured within these non-custodial Vaults, equivalent tokens such as FXRP are automatically generated by the smart contract.
This upgrade is ultimately about giving XRP real utility. XRP is the third-largest crypto asset, excluding Tether—it’s a vast asset. It would be idiotic for us not to build a protocol that serves it. FXRP isn’t just a wrapper—it’s how XRP becomes usable in a composable DeFi world
Hugo Philion, Co-founder and CEO of Flare.
Through this upgrade, the use of XRP in various DeFi activities—such as lending, borrowing, staking, and yield farming—will be made possible for users.
How Flare’s FXRP Stands Apart
The primary distinction between Flare’s FXRP and other bridged assets lies in the approach to custody and security. In the past, significant security vulnerabilities were associated with bridged assets, as users were required to hand over custody of their tokens to third parties, making cross-chain bridges susceptible to exploits and rug pulls.
As reported by Chainalysis, more than $1 billion in losses resulting from security breaches in 2022 were attributed to cross-chain bridges. Owing to the custody challenges and technical intricacies, these bridges were responsible for approximately 70% of the total losses experienced in the cryptocurrency sector.
