Three addresses hold 93% of the 7.18 million RLUSD-denominated loans outstanding on a Morpho market backed by tokenized XRP, according to on-chain data observed on Oct. 1.

The Morpho Ethereum variable-rate market references FXRP as collateral and Ripple's RLUSD stablecoin as the borrowing asset. It held roughly 7.18 million RLUSD in outstanding loans against 10.76 million FXRP at the reporting date, a ratio that gives the three largest wallets outsized influence over the market's size.

The market launched in August through Flare's FAssets system. The protocol lets XRP holders mint FXRP, bridge it to Ethereum, and borrow RLUSD without immediately selling their XRP exposure.

That introduces a new credit use case for XRP. It also brings bridge, collateral, and redemption dependencies that native XRP holders do not face.

How concentrated is the borrower base?

On-chain records identify wallets, not their owners. Several addresses could belong to a single investor or institution, meaning real-world concentration may exceed what the address count shows.

Funding is similarly concentrated. Sentora RLUSD Main supplied about 8.53 million RLUSD, providing nearly all available borrower liquidity at the time observed.

The FXRP market represents only 2.03% of Sentora's broader vault allocations. Sentora can supply up to 10 million RLUSD under the current limit, leaving spare capacity if demand rises.

A large repayment could sharply shrink borrowing. Another loan from the same wallets could lift the total without bringing in new participants.

What are the liquidation risks?

Morpho documentation specifies that lenders can liquidate a position once debt rises above 77% of collateral value. The three largest borrowers remain well away from that point.

The largest position could withstand roughly a 45% decline in the FXRP-to-RLUSD ratio. The next two positions carry buffers near 38%.

One smaller position, holding about 121,000 RLUSD of debt against 133,000 FXRP, could reach its liquidation threshold after roughly a 21% decline, assuming the position otherwise remains unchanged.

The market recorded some liquidations in September. It showed no realized or unrealized bad debt as of Oct. 1.

A sharper move would provide a more meaningful test. A liquidator absorbing one of the largest positions would need to handle a sizeable FXRP holding.

A liquidator could hold the FXRP, sell it on Ethereum, bridge it back toward Flare, or redeem it for native XRP. The underlying XRP would not be sold automatically.

Will native XRPL lending change the picture?

Developers are preparing to bring lending onto the XRP Ledger itself. The proposed lending architecture, currently undergoing security reviews, would allow fixed-term credit to originate on XRPL rather than requiring XRP holders to mint FXRP and borrow through Morpho.

Removing those steps could make XRP-backed credit easier to access. It would also introduce a different credit model from Morpho's overcollateralized loans, with underwriting handled before fixed-term loans are created.

More lending would not necessarily translate into fresh demand for XRP. Existing holders could deploy XRP they already own. Institutions could recycle balances through lending markets. Debt could rise without an increase in the number of XRP owners or new capital entering the token.

If the amendments clear security reviews and gain validator approval, XRP holders will have a direct lending route on XRPL alongside the existing Ethereum-based Morpho market.

That comparison will determine whether reducing cross-chain friction attracts a broader borrower base or simply gives existing holders another way to leverage the same capital.