Expanding XRP Utility in 2025 Could Transform the Token's Role Within the Broader Blockchain Economy

Among the largest digital assets, XRP is notable for its lack of native smart contract support and renowned contribution to low-cost, rapid cross-border payments.

As the ecosystem develops, there is an increasing focus on expanding XRP’s utility through decentralized finance (DeFi) infrastructure, which could reshape the token’s role within the broader blockchain domain.

A New Phase: Expanding XRP Utility in 2025

There is a rising demand for regulated and efficient methods for individuals and institutions to gain DeFi exposure to XRP.

This interest is growing amid the U.S. Securities and Exchange Commission’s move to drop its case against Ripple, Ripple’s stablecoin RLUSD surpassing $300 million in market cap, and ongoing speculation about the potential launch of XRP-based exchange-traded funds (ETFs). Together, these developments suggest that 2025 could be a pivotal year for the evolution of XRP’s ecosystem.

While XRP’s core use case as a payments asset remains strong, its holders are now seeking more robust ways to participate in decentralized lending, yield farming, trading, and staking opportunities. The ecosystem needs infrastructure that supports secure, composable DeFi tools to facilitate this transformation.

DeFi Limitations on XRPL

Although the XRP Ledger was designed to optimize payment efficiency, it lacks the native capabilities for advanced DeFi applications. The architecture does not support the Ethereum Virtual Machine (EVM) or general-purpose smart contracts.

This restricts deploying decentralized exchanges (DEXs), lending markets, and other DeFi protocols directly on XRPL. While an automated market maker (AMM) exists, the range of available tools is limited compared to what XRP’s market position suggests.

Leveraging Flare for XRPFi

To overcome these technical constraints and unlock the full potential of XRP in DeFi, it must be integrated with more interoperable, smart contract-enabled blockchains. Flare provides this capability.

As a Layer 1 network built with native EVM support and enshrined data protocols, Flare allows non-smart contract tokens like XRP to be used trustlessly in decentralized applications.

Flare has been focused on this vision since its development. The platform is positioned as the foundation for “XRPFi”—a decentralized finance environment designed to maximize the potential of XRP as a financial asset. With the necessary infrastructure now live, XRPFi is entering an operational phase.

Stablecoin Liquidity with USD₮0

A critical aspect of any DeFi system is access to stable, interoperable liquidity. On Flare, this is facilitated through USD₮0, an omnichain stablecoin that maintains a 1:1 peg with Ethereum-based USDT. Using LayerZero’s OFT (Omnichain Fungible Token) standard, USD₮0 can be transferred across blockchains without custodial bridges, reducing risks and increasing usability.

USD₮0 has already been integrated with several major ecosystems like Arbitrum and Optimism and is expanding further across centralized exchanges. This makes it a practical liquidity foundation for XRPFi. When paired with XRP, USD₮0 enables lending, trading, and liquidity provision with minimal slippage and high capital efficiency.

Composability via FAssets and FXRP

Flare’s FAssets protocol is crucial for bringing XRP and other non-smart contract assets into the DeFi space in a decentralized manner. Through this system, XRP is represented as FXRP, a token that mirrors the value of XRP while gaining EVM compatibility. Once converted, FXRP can be used across any DeFi application on the Flare network.

With the version 1.1 upgrade to FAssets, users can mint more FXRP as new collateral enters the system. This paves the way for participating in newer financial sectors, such as restaking. As liquidity grows, so does the usability of FXRP across DeFi protocols.

DeFi Growth on Flare

Over the past year, Flare has seen substantial expansion. From February 2024 to February 2025, total value locked (TVL) increased by over 400%. In the last week alone, the stablecoin market cap on Flare rose by 1600%, with $60 million of new USD₮0 being utilized.

This trend reflects a broader acceleration of DeFi activity, supported by integrations with wallets like Bifrost and Oxenflow that allow for seamless participation with XRP.

The different parts of this ecosystem create a feedback loop that accelerates the growth of XRPFi. USD₮0 provides stable liquidity, FXRP enables smart contract access, and together they build deeper trading pools, improve market efficiency, and encourage greater user engagement. As activity grows, so do yields and opportunities for real-world use of XRP.

Outlook for XRP DeFi

The launch of products like USD₮0 and FXRP, combined with the maturity of Flare’s infrastructure, marks a new phase in XRP’s development. Institutional and retail holders now have the tools to deploy XRP in a fully decentralized, composable environment.

This shift increases the token’s utility and positions XRP