David Schwartz vs. Flare CEO: How Big Can XRP Ledger Lending Get?

A debate over XRP lending has opened between Ripple CTO Emeritus David Schwartz and Flare CEO Hugo Philion, who differ on how big the XRP Ledger opportunity could be.

The exchange stays friendly, yet it shows a race to build XRP lending before the native tools even launch.

What XRP Ledger Lending Is and Why It Matters

XRP Ledger lending is a native feature that lets users lend and borrow assets directly on the blockchain. Validators are still voting on XLS-66, the proposal for this feature. XRPL Commons said lending is about to go live. It also promoted a New York hackathon with lending and borrowing tracks.

Schwartz said that no one has built anything with the feature yet, so early developers still have plenty of room. Extending credit on the XRP Ledger has appealed to him from the start.

“I guess it depends whether you mean more innovation at the protocol level or using what’s already in the protocol. For using what’s already in the protocol, the issued asset scheme is definitely the most interesting to me. But I think also lending, just because it’s new and there’s just, you know, nobody’s done anything with it yet,” Schwartz said.

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He would like to see more developers use the ledger’s existing tools. The Ripple CTO Emeritus described lending as one of the biggest needs in any financial system. The ledger’s philosophy favors curated, best-in-class versions of useful functions.

Why Does Flare See a Bigger Opportunity?

Philion replied on X that Schwartz is incredibly bright but may still underestimate how big lending can become.

In his view, many observers overlook the outside infrastructure that can connect to the XRP Ledger. Philion confirmed that Flare will deploy lending logic on its own side rather than wait for major XRPL upgrades.

Its approach uses Protocol Managed Wallets and the Flare Confidential Compute stack. The team aims to deliver near-full smart-contract capabilities.

Holders could then lend coins from native XRPL wallets and avoid the risks of traditional cross-chain bridges. This keeps assets closer to the native environment. Fees would flow to the Flare ecosystem.

Early Demand Signals a Competitive Lending Market

Evidence of demand already exists through Flare’s infrastructure. Investors have borrowed $7.95 million in Ripple’s RLUSD stablecoin against 10.8 million wrapped XRP (FXRP). Three addresses hold about 93% of that debt in Morpho pools, and Sentora supplies the liquidity.

That concentration limits what the figures prove, yet they show interest before native lending activates. RLUSD’s supply stands near $2.53 billion, so the market has room to grow. If XLS-66 advances, native and Flare-based markets could compete and complement each other.

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For XRP holders, the debate points to growing momentum for putting the asset to work beyond payments. Lending could unlock new utility and demand in the months ahead.