Flare co-founder and Flare Labs CEO Hugo Philion has outlined the network’s latest progress as the project pushes to build a broader decentralized finance ecosystem around XRP. Positioned as an EVM-based Layer 1 blockchain, Flare is trying to unlock utility for an asset base that Philion described as large but still underused, while also preparing the groundwork for the tokenization of real-world assets (RWA).
Philion’s comments frame Flare not simply as another smart contract chain, but as infrastructure designed to connect data, bridging, and onchain finance in a way that can make XRP more productive inside DeFi. In his view, decentralized finance represents a superior financial technology stack and, over time, could replace parts of a traditional system that still depends heavily on intermediaries.
Building a DeFi stack around XRP
At the core of Flare’s strategy is the idea that XRP holders should be able to access a fuller range of financial tools directly onchain. According to Philion, the network has already assembled a broad set of capabilities for users who want to put XRP to work beyond transfers and passive holding. Those tools include borrowing and lending, decentralized exchange trading, decentralized stablecoin creation, and collateralized options strategies.
Flare says its architecture uses embedded data protocols to power both its bridging infrastructure and its DeFi ecosystem. That design is central to its effort to turn XRP into a more flexible onchain asset, especially as the project looks beyond basic DeFi functions and toward more advanced use cases. The immediate objective, Philion said, is to deepen these markets, improve liquidity, and build enough activity for the network’s next stage: pairing XRP with a wider range of tokenized real-world assets.
That vision places Flare within a growing segment of the crypto market focused on making established digital assets interoperable with more sophisticated financial rails. Rather than launching a DeFi ecosystem from scratch around a newly created token, Flare is trying to leverage the existing scale of XRP ownership and channel that liquidity into lending, trading, and structured financial activity.
Smart Accounts lower the barrier for XRP holders
A major part of that strategy is user onboarding. Flare recently introduced Flare Smart Accounts, which Philion described as a game-changing abstraction layer for XRP holders. The feature is designed to remove a common source of friction for retail users: the need to acquire Flare’s native token first or install a separate wallet before interacting with applications on the network.
With Smart Accounts, users can control transactions on Flare directly from the XRP Ledger. That includes actions such as minting FXRP—the bridged version of XRP on Flare—or depositing assets into vaults. By reducing setup complexity and minimizing the number of steps required to participate, Flare hopes to make DeFi more accessible to a much larger portion of the XRP community.
Philion said the early response has been meaningful. Within just 10 days of the Smart Accounts launch, FXRP grew 31%, reaching roughly 133 million. While that figure alone does not define long-term success, it does suggest that simplifying the user experience can translate quickly into onchain adoption. For Flare, the takeaway is clear: lowering friction may be one of the most effective ways to activate dormant XRP capital.
Institutional opportunity remains the larger prize
Even though Flare has emphasized retail accessibility, Philion made it clear that the project sees an even larger opportunity in institutional participation. He noted that an estimated 60% to 70% of XRP is currently held on exchanges. If a significant share of that capital can eventually move into onchain financial products, the addressable market for XRP-based DeFi could expand substantially.
That institutional angle is closely tied to Flare’s longer-term thesis on tokenization. Philion argued that the migration of traditional financial assets—including equities, bonds, and derivatives—onto blockchain rails is not merely possible but ultimately inevitable. Under that framework, Flare’s current job is to maximize the utility and liquidity of XRP first. Once that base becomes deep enough, the network could use it as a springboard to integrate additional major assets, including Bitcoin, into the Flare DeFi environment.
This sequencing matters. Rather than trying to support every asset class at once, Flare appears to be prioritizing one large, recognizable crypto asset with an existing global holder base. If that approach succeeds, XRP could become both a source of liquidity and an entry point for broader multi-asset DeFi activity on the network.
Flare 2.0 targets privacy and complex financial applications
One of the most important obstacles to institutional adoption, according to Philion, is the need for privacy in trading and in more advanced financial applications. Many real-world asset workflows require more discretion and complexity than standard transparent smart contracts can easily provide. To address this, Flare is preparing its anticipated Flare 2.0 upgrade, which will introduce a new compute layer.
The proposed compute layer is intended to let applications execute offchain with full privacy while still settling securely onchain. In practical terms, that model could give developers a way to combine confidential computation with blockchain-based settlement guarantees. For markets involving tokenized real-world assets, that balance may be especially important, since institutions often require privacy for order flow, pricing logic, and internal execution strategies.
Flare believes this more powerful and privacy-preserving architecture could make the network a central venue for RWA-related applications. Philion pointed specifically to the possibility of supporting more complex products such as DEXs and lending protocols for assets issued directly on Flare or on connected chains such as the XRP Ledger.
If delivered as described, the compute layer would represent more than a technical upgrade. It would be a strategic attempt to solve one of the core limitations holding back institutional-grade DeFi and tokenization: how to preserve privacy without giving up the benefits of open blockchain settlement.
A broader DeFi vision anchored in XRP
The bigger picture behind Philion’s remarks is that Flare wants to become more than an auxiliary network for XRP. It is trying to position itself as a bridge between existing crypto liquidity, decentralized finance infrastructure, and tokenized real-world assets. That requires progress on several fronts at once: better user experience, deeper liquidity, broader market tools, and technology capable of supporting more demanding applications.
So far, Flare’s messaging suggests a phased strategy. First, make XRP easier to use in DeFi. Second, grow liquidity and onchain participation through products that users can access with less friction. Third, add the infrastructure needed for institutionally relevant financial activity, especially in areas where privacy and complexity are essential. Finally, use that foundation to connect XRP with a broader universe of tokenized assets.
Whether Flare can execute on that roadmap remains to be seen, but the direction is becoming clearer. The network is betting that XRP’s large installed base, combined with a more usable DeFi stack and a privacy-enabled compute layer, can help it carve out a meaningful role in the next stage of crypto finance. As competition intensifies around tokenization and onchain capital markets, Flare’s attempt to align XRP utility with RWA infrastructure will be closely watched.