XRP Holders Can Now Trade Options Using Flare’s FXRP as Collateral

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DeFi

In brief

Derive now accepts Flare’s FXRP as collateral for $XRP options and perpetual futures.
Users can trade through their own wallets without relying on a centralized exchange.
Options settle in $USDC, exposing traders to margin and liquidation risks.

$XRP holders can now use Flare’s FXRP as collateral to trade options and perpetual futures on decentralized exchange Derive, Flare announced on Thursday.

According to Flare, users mint FXRP, a token representing $XRP on the Flare blockchain, through its FAssets bridge that converts tokens like Bitcoin, $XRP, and Dogecoin into ERC-20 tokens on the Flare network. They can then deposit the token into a Derive Portfolio Margin V2 account and trade derivatives from their own wallets.

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Options give traders the right to buy or sell an asset at a set price. Perpetual futures allow them to bet on price movements without an expiration date. $XRP holders can use the products to hedge against losses, earn premiums by selling options, or speculate on the token’s price.

“Options are often the last major market to develop around an asset, and $XRP has been waiting for the infrastructure,” founder and CEO of Derive, Nick Forster, said in a statement. “FXRP gives one of crypto’s largest holder bases a credible path onchain, and adding Derive’s options markets means that capital can now be hedged, used to earn premium and traded with the same sophistication available around other major assets.”

Derive’s $XRP options settle in $USDC rather than $XRP. If an option expires at a profit, Derive pays the difference in the dollar-pegged stablecoin while the FXRP remains posted as collateral. Options sellers must hold enough $USDC to cover settlement and maintain the required margin or risk liquidation.

The integration broadens FXRP’s use in decentralized finance. Earlier this month, FXRP was approved as collateral in DeFi risk management firm Sentora’s $RLUSD Main vault on the Ethereum-based lending protocol Morpho. That service allows $XRP holders to bridge FXRP to Ethereum and borrow Ripple’s $RLUSD stablecoin without selling their $XRP.