XRP-Backed Stablecoin Loans Launch on Flare Network Via Enosys - First Time Occurrence
The decentralized finance (DeFi) sector is set for a significant shake-up with the introduction of XRP-backed stablecoin loans on the Flare interoperability layer-1 network. This development comes courtesy of Enosys, a company that is deploying the Liquity Version 2 protocol on the Flare Network, launching Enosys Loans - a friendly fork of Liquity V2, specifically adapted for Flare.
Since its launch in 2021, Liquity has proven to be one of the most tried and trusted protocols in the DeFi sector, securing billions of dollars in collateral and maintaining its stablecoin peg amid extreme market conditions. The success of Liquity is due in part to its Collateralized Debt Position (CDP) protocol, which allows holders of XRP to mint overcollateralized stablecoins on Flare.
Enosys Loans will utilize data from the Flare Time Series Oracle (FTSO) to implement decentralized collateral pricing, ensuring the stability of the minted stablecoins. This mechanism also makes sure the protocol can cover outstanding debt in the event of liquidation.
One of the key features of Enosys Loans is the ability for borrowers to set the annual percentage rate (APR) they're willing to pay. This user-set borrowing rate, along with protocol-incentivized liquidity and capital efficiency, will be upgraded in the Liquity V2 fork on Flare.
Another mechanism at the core of Liquity's success is the protocol's stability pool. Users can lock their Flare XRP (FXRP) and Wrapped Flare (wFLR) on Flare to mint stablecoins. By staking their stablecoins, users can earn yield coming from mint fees, liquidation rewards, and interests paid on loans.
The alliance between Enosys and Flare will initially affect select Flare-native tokens, with plans to expand to staked XRP (stXRP) soon. This marks the beginning of bringing Liquity V2 to Flare, laying the foundation for stable, decentralized liquidity powered by XRP and enhanced by liquid staking.
With Enosys Loans, users can access DeFi yield opportunities by minting stablecoins backed by Ripple's native cryptocurrency, XRP. This development is set to further boost the adoption and utility of XRP within the DeFi ecosystem.
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