Flare Report Finds Nearly 90% of FXRP Supply Deployed in DeFi as Data Fees Grow

FXRP, a token designed to make XRP usable in decentralized finance, has reached a point where most of its circulating supply is being used across lending, collateral and other DeFi applications, according to a report published by DefiLlama on October 21. The analysis estimates that approximately 129 million of the 145 million FXRP tokens in circulation are deployed in DeFi, equivalent to nearly 90% of the supply.

The figures offer evidence that Flare’s effort to bring assets from blockchains with limited smart-contract functionality into decentralized finance is gaining traction. However, the report also highlights a distinction between asset utilization and sustainable economic growth. High deployment does not automatically translate into profitable lending, strong liquidity or lasting demand for Flare’s native FLR token.

FXRP launched in September 2025 through Flare’s FAssets system, which allows XRP holders to obtain a representation of their holdings on Flare and use it in applications such as lending and trading. The system relies on Flare’s data infrastructure to verify transactions on the XRP Ledger and support the collateral mechanisms behind asset issuance and redemption.

Lending is the largest use case for deployed FXRP. According to the report, lending markets across Morpho and Kinetic on Flare, Morpho on Ethereum and Euler on Monad account for the largest share of activity. Holders can post FXRP as collateral to borrow other assets rather than sell their XRP exposure.

One example cited in the analysis is a Sentora-managed RLUSD vault on Morpho, where 10.6 million FXRP backed approximately $7.9 million in supplied RLUSD in late September. That arrangement illustrates how XRP exposure can support borrowing in a stablecoin without requiring holders to liquidate their positions.

The practical value depends on the terms of each lending market, including collateral requirements, liquidation thresholds, borrowing costs and available liquidity. If the value of collateral falls or a market becomes illiquid, borrowers can face liquidation, while lenders remain exposed to the risks of the underlying protocol and asset infrastructure.

Cross-chain expansion is another significant development. DefiLlama’s analysis puts FXRP deployed outside Flare at approximately 20 million tokens, five times the level recorded in July. The report attributes this expansion to FXRP’s availability across multiple networks, including Ethereum and Monad, as well as its integration into Hyperliquid’s HyperCore trading environment. FXRP is issued using LayerZero’s Omnichain Fungible Token standard, which supports token movement across connected networks.

That growth suggests FXRP’s potential use is not limited to applications built directly on Flare. Access to lending and trading markets elsewhere could widen its utility, although cross-chain transfers introduce additional dependencies and security considerations. The amount of FXRP deployed across networks also does not, by itself, establish how much independent demand exists or how easily large positions could be unwound during market stress.

The report also identifies Flare’s data infrastructure as an increasingly important part of its economic model. Since the implementation of governance proposal FIP.16, fees generated by the Flare Data Connector (FDC) have become a faster-growing revenue source than other protocol revenue categories, accounting for 45% of total revenue, according to the supplied announcement and report. The connector enables smart contracts to verify events and information originating outside Flare, including transactions on other blockchains.

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This matters because Flare’s strategy extends beyond hosting decentralized applications. Its data protocols are designed to provide the verification infrastructure needed to connect external assets and information with onchain financial services. FDC helps verify external events, while the Flare Time Series Oracle supplies price data that applications can use to value assets and manage collateral.

The model creates potential demand for Flare’s infrastructure as more applications rely on these services. But rising fees from one protocol component should not be confused with equivalent growth in profits or token value. The economic impact will depend on the scale of fee generation, the costs of operating and securing the network, and how much revenue ultimately offsets token issuance.

Flare has also changed aspects of its staking and token economics. The announcement reports that direct staking increased from approximately 32% to 46% of staked or delegated FLR between April and August, following a July hard fork that gave direct staking greater weight. The shift could affect how holders choose to participate in network security and how influence is distributed among data providers.

Another planned development is Flare Confidential Compute, which is intended to let smart contracts verify results derived from private institutional information without publishing the underlying data. Its initial application supports proof of reserves for Hex Trust’s USDX stablecoin on Songbird, Flare’s canary network. The report identifies deployment on Flare mainnet as a future milestone, rather than an already completed launch.

The technology could be relevant to tokenized funds, private credit and other financial products that need to demonstrate compliance or verify financial information while protecting confidential records. Its usefulness will nevertheless depend on the quality of the source data, the security assumptions of the confidential-computing hardware and the degree of trust required in the operators involved.

Flare’s planned Bitcoin integration through FBTC is another milestone to watch. If implemented successfully, it could extend the FAssets model beyond XRP and allow Bitcoin exposure to be used in similar decentralized financial applications. The announcement does not establish a launch date, so the integration remains a future development rather than evidence of current Bitcoin adoption on Flare.

The broader challenge is converting early product usage into durable economic activity. FXRP’s deployment figures provide a useful measure of utilization, but they do not independently establish lending profitability, organic user growth or resilience during market downturns. Likewise, cross-chain expansion can increase access to liquidity while introducing dependencies on bridging infrastructure and destination-chain protocols.

For investors, the key indicators will be whether FXRP deployment remains stable without incentives, whether cross-chain activity continues to expand, and whether data-related fees grow enough to make a meaningful contribution to Flare’s token economics. The performance of Confidential Compute and the eventual launch of FBTC will offer further evidence of whether the network can attract demand beyond its initial XRP-focused ecosystem.

The DefiLlama report points to growing use of Flare’s infrastructure, particularly through XRP-backed lending and external data verification. Whether that activity develops into a broader competitive advantage will depend on adoption, risk management and the ability to generate sustainable revenue as the network expands.