Enosys Loans: bringing the first XRP‑backed stablecoin to the Flare network
Enosys has unveiled Enosys Loans, a new Collateralized Debt Position (CDP) protocol on Flare that lets users lock FXRP or wFLR as collateral and mint a decentralized, overcollateralized stablecoin. Support for staked XRP (stXRP) is set to follow, turning XRP into a fully composable asset across the Flare DeFi stack.
At launch, users can open a CDP by depositing FXRP – a 1:1 representation of XRP on Flare – or wFLR. In return, they can mint a new stablecoin that aims to track the value of 1 US dollar. Rather than selling their XRP, holders can borrow against it, unlocking liquidity while maintaining exposure to the underlying asset.
How CDPs underpin decentralized stablecoins
The core engine of Enosys Loans is the CDP mechanism. A CDP is essentially an on-chain vault: users deposit crypto as collateral and mint a stablecoin against that collateral, subject to strict overcollateralization ratios. The value of the collateral must exceed the value of the issued debt by a healthy margin, creating a buffer that helps the stablecoin maintain its peg even in volatile market conditions.
This structure allows XRP holders to put their assets to work without giving them up. Instead of selling during market upswings or downturns, they can borrow stablecoins to access liquidity for trading, yield farming, or everyday on-chain payments, while continuing to benefit from potential XRP price appreciation.
The role of the Stability Pool
A critical part of the Enosys Loans architecture is the Stability Pool. This pool is funded by users who choose to deposit the stablecoin itself. In return, they earn real yield flowing from several sources: minting fees, interest paid by borrowers, and rewards from liquidations when undercollateralized positions are closed.
When a CDP falls below the minimum collateralization threshold, the protocol can use the Stability Pool’s funds to cancel out the bad debt and seize the collateral. This mechanism keeps the system solvent and helps maintain the stablecoin’s peg. Stability Pool depositors benefit by receiving discounted collateral in liquidation events, on top of ongoing fee revenues.
FTSO: decentralized pricing for collateral
Accurate, tamper-resistant pricing is essential for any borrowing protocol. Enosys Loans integrates directly with Flare’s native oracle system, the Flare Time Series Oracle (FTSO), to value collateral. Instead of fetching prices from a single centralized source, the FTSO aggregates data from multiple independent signal providers and reaches a decentralized consensus on asset prices.
This design reduces the risk of oracle manipulation and mispricing, which can otherwise lead to unfair liquidations or instability in the system. By tying the CDP logic to a robust, on-chain oracle, Enosys aims to increase the reliability and security of collateral valuations for FXRP, wFLR, and future supported assets.
A friendly fork of Liquity V2
Enosys Loans is built as a friendly fork of Liquity V2, one of the most battle-tested CDP frameworks in decentralized finance. Since 2021, Liquity has handled extreme market conditions, maintained its stablecoin’s peg, and proven the resilience of its redemption and Stability Pool mechanisms.
Liquity V2 preserves the fundamentals that made the original protocol trusted: immutability, non-custodial design, and a high degree of decentralization. On top of that, it introduces upgrades such as user-defined borrowing rates, better capital efficiency, and protocol-incentivized liquidity. Enosys brings this refined model to Flare, tailoring it to the XRP and Flare-native asset ecosystem.
User‑set borrowing rates and redemption dynamics
One of the more distinctive elements of the V2 design is the ability for borrowers to choose the annual percentage rate (APR) they are willing to pay. This creates a dynamic interest market inside the protocol. However, this flexibility comes with a strategic tradeoff.
Positions with the lowest chosen APR are first in line for redemptions if the stablecoin trades below its 1 dollar target. In such a scenario, arbitrageurs can redeem stablecoins directly against underpriced collateral, pushing the price back toward the peg. Borrowers who opted for very low rates accept higher redemption risk, while those paying slightly more may enjoy greater protection from early redemptions. This mechanism balances borrower demand, stability, and peg robustness.
Earning with the Stability Pool and DEX liquidity
Early adopters of Enosys Loans who deposit the minted stablecoin into the Stability Pool or provide liquidity on supported decentralized exchanges become eligible for rFLR incentives. These rewards complement the inherent yield from fee distribution and liquidation gains, making it attractive for users to help bootstrap deep and stable liquidity.
Liquidity providers can deploy the stablecoin in trading pairs against FXRP, wFLR, or other Flare-native tokens, capturing trading fees and potential incentive programs. This liquidity is vital: the more liquid the stablecoin is on DEXs, the tighter its market peg and the easier it becomes for users to enter and exit positions efficiently.
Upcoming support for stXRP: leveraging staking and borrowing simultaneously
Shortly after launch, Enosys Loans plans to add support for stXRP – a liquid staking token that represents staked XRP. By using stXRP as collateral, users can effectively stack two yield layers: staking rewards generated by the underlying XRP, plus the ability to mint stablecoins against the stXRP itself.
This dual-utility model is a powerful tool for capital efficiency. Long-term XRP holders gain an option to keep their assets staked for network security and yield, while simultaneously tapping into borrowing and DeFi strategies without unwinding their staking positions.
Broadening collateral options on Flare
While FXRP, wFLR, and stXRP are the first collateral types, Enosys has signaled plans to support additional Flare-native assets over time. Native FLR and other FAssets are on the roadmap, which would expand the range of tokens that can be transformed into productive collateral in the system.
Diversifying collateral types spreads risk, attracts new user segments, and ties more of the Flare asset universe into a single, coherent liquidity layer. The more composable these assets become, the easier it is for other DeFi protocols to integrate Enosys Loans and build higher-level products on top.
Why XRP‑backed stablecoins on Flare matter
For years, XRP holders had limited access to trustless, on-chain borrowing options compared with communities built around assets like ETH. Enosys Loans changes that by making it possible to mint a decentralized stablecoin fully backed by XRP representations on Flare.
This unlocks several use cases:
– Borrowers can tap into stable liquidity without selling XRP.
– Traders can leverage XRP exposure while maintaining a safety buffer through overcollateralization.
– Yield farmers can use the stablecoin in liquidity pools, lending markets, and other DeFi strategies.
– Protocols across the Flare ecosystem can integrate the stablecoin as a reliable unit of account and collateral type.
By migrating a proven CDP model onto Flare, Enosys is positioning XRP as a first-class asset in DeFi, not just a token primarily used for transfers or centralized trading.
Risk management and liquidation mechanics
Any borrowing protocol that relies on volatile collateral must carefully manage risk. Enosys Loans enforces strict minimum collateral ratios, monitored against live oracle prices. If a borrower’s position falls below the required threshold due to price swings, the protocol can liquidate part or all of the collateral to repay outstanding debt.
Liquidators and Stability Pool participants play an important role in this process. They step in to absorb undercollateralized positions, earning fees and discounted collateral in return. This creates economic incentives for third parties to keep the system solvent, rather than relying on a centralized risk manager.
For users, this means that maintaining healthy collateralization levels is essential. Managing leverage, monitoring market conditions, and understanding how redemptions work are all key to using the system responsibly.
Composability with the wider Flare DeFi stack
Beyond its standalone borrowing functionality, Enosys Loans is designed to serve as a base-layer “credit primitive” for the broader Flare ecosystem. Developers can integrate the stablecoin and CDP mechanics into their own applications, enabling features such as:
– Leveraged yield strategies using FXRP, stXRP, or FLR
– Automated portfolio rebalancing strategies that borrow or repay stablecoins according to on-chain signals
– Structured products that combine staking yields, borrowing, and liquidity provision into a single user-facing interface
This composability helps transform Flare into a more complete financial layer, with XRP-backed liquidity at its core.
Incentive design and ecosystem growth
The use of rFLR incentives is more than a short‑term stimulus. Properly tuned incentive programs can guide user behavior toward actions that enhance the protocol’s long‑term health: deep liquidity, stable collateralization, and wide distribution of the stablecoin.
As participation grows, the protocol can adjust parameters such as target collateralization levels, reward allocations, and supported collateral types. Over time, the goal is to reach a state where organic demand and real yield sustain the system, with incentives acting as a complement rather than the primary driver.
What users should consider before participating
While Enosys Loans introduces attractive opportunities for XRP holders and DeFi users on Flare, it also comes with the usual set of risks associated with smart contracts, volatility, and leverage. Users should consider:
– Collateral volatility: sharp price drops can trigger liquidations.
– Oracle dependencies: although FTSO is decentralized, oracle disruptions remain a systemic risk in DeFi.
– Interest and redemption dynamics: choosing very low borrowing rates may expose positions to earlier redemptions.
– Smart contract risk: as with any on-chain protocol, smart contract bugs or exploits cannot be fully ruled out.
Anyone looking to interact with the protocol should take time to understand how CDPs, the Stability Pool, liquidation, and redemptions work, and only deploy capital they can afford to risk.
Building a stable liquidity foundation for Flare
By combining Liquity V2’s robust CDP design with Flare’s data infrastructure and XRP-based collateral, Enosys Loans aims to create a durable foundation for decentralized liquidity on the network. A stable, overcollateralized XRP-backed stablecoin can serve as the backbone for lending, trading, and payments within Flare’s growing DeFi ecosystem.
As support for stXRP and additional FAssets rolls out, and as more applications plug into the protocol, Enosys Loans could become a central piece of financial infrastructure for XRP holders seeking trustless borrowing, stable yields, and deeper integration into decentralized finance.