David Schwartz and Flare CEO Hugo Philion Split on XRP Lending's Ceiling

A disagreement over XRP lending has emerged between Ripple CTO Emeritus David Schwartz and Flare CEO Hugo Philion over the possible scale of the XRP Ledger opportunity.

Although the discussion remains cordial, it highlights a rush to deliver XRP lending before the native features are even live.

Understanding XRP Ledger Lending and Its Stakes

Lending on the XRP Ledger is a built-in feature that lets users lend and borrow assets directly on the chain. The enabling proposal, XLS-66, remains under validator vote. XRPL Commons has said lending is close to going live, and it also flagged a New York hackathon devoted to lending and borrowing tracks.

According to Schwartz, nobody has constructed anything using the feature yet, leaving early builders ample room. The prospect of extending credit on the XRP Ledger has drawn his interest from the beginning.

“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.

Lending is getting closer to launching on the XRP Ledger, and David Schwartz says nobody has really done anything with it yet.

First mover advantage on XRPL is still wide open. 👀

— John Squire (@TheCryptoSquire) October 6, 2026

He hopes more developers will put the ledger’s current toolkit to use. The Ripple CTO Emeritus has called lending one of the largest requirements in any financial system. The ledger’s philosophy gravitates toward curated, best-in-class implementations of useful functions.

Why Flare Thinks the Potential Is Bigger

In a reply on X, Philion said Schwartz is exceptionally smart but might still be underestimating the scale lending could reach.

He believes many observers miss the external infrastructure that could connect to the XRP Ledger. Philion confirmed Flare will run lending logic on its own side instead of waiting for significant XRPL upgrades.

That strategy makes use of Protocol Managed Wallets and the Flare Confidential Compute stack. The team is aiming for near-full smart-contract capabilities.

@JoelKatz thinks that lending on the XRPL will be big. As incredibly bright as David is – I’d wager that even he is underestimating quite how big it can be! 😉

— Hugo Philion (@HugoPhilion) October 7, 2026

From there, holders would be able to lend coins out of native XRPL wallets and steer clear of the usual perils of cross-chain bridges. Assets would remain closer to the native environment. The Flare ecosystem would receive the fees.

Early Demand Points to a Contested Lending Market

Signs of demand are already present in Flare’s infrastructure. Borrowers have drawn $7.95 million in Ripple’s RLUSD stablecoin against 10.8 million wrapped XRP (FXRP). Roughly 93% of that debt sits with just three addresses in Morpho pools, and Sentora provides the liquidity.

The concentration limits how much can be inferred from the figures; still, they demonstrate interest ahead of native lending going live. RLUSD’s supply is close to $2.53 billion, leaving the market space to expand. Should XLS-66 move forward, native and Flare-based markets could both compete with and complement each other.

XRP holders, for their part, see the debate as evidence of rising momentum behind putting the asset to work beyond payments. Lending might create fresh utility and demand in the months to come.