[DigitalToday reporter Jinju Hong] Flare is set to begin a full-scale expansion of XRPFi, an XRP-based decentralised finance (DeFi) ecosystem, over the next six months. The core is to build infrastructure so XRP can be used as a DeFi asset rather than a simple payment asset, and the market is focused on how much liquidity will actually flow in.

On July 26 (local time), blockchain outlet U.Today reported that Flare Networks co-founder and CEO Hugo Philion (휴고 필리온) said the next six months will "bring change" to the XRPFi ecosystem. He also outlined a plan to develop Flare into a fully programmable layer for the XRP Ledger (XRPL).

Flare's goal is to use XRP as a practical DeFi asset. Because the XRP Ledger was designed with a focus on fast payments, its smart contract capabilities are limited, leaving large amounts of XRP stored in wallets without being used across financial services.

To address this, Flare is introducing the FAssets system. Users can convert their XRP through a hot wallet into FXRP, a wrapped token at a 1-to-1 ratio, and then take part in DeFi services such as staking, liquidity provision and on-chain lending.

The first technical update is expected to begin in about two weeks. Philion said the next six months will bring change to XRPFi through Flare and that related functions will be expanded in stages.

Some market expectations are also emerging. FXRP issuance has already exceeded 150 million tokens. Philion projected that up to 5 billion XRP could flow into the Flare ecosystem over the long term, about 5 percent of total XRP supply. Observers say that if that volume is actually deposited into DeFi protocols, the amount of XRP circulating on exchanges could fall, affecting market supply and demand.

Some analysis, however, suggests it will take time for any real market impact to appear. The next six months will focus on infrastructure building and code deployment, and institutional investors are likely to carry out additional security audits and verification procedures for the new bridge system. That means large institutional funds may not flow in immediately, with participation potentially picking up only after sufficient stability is confirmed.

Flare also plans to improve transaction transparency, cited as a weakness of existing DeFi, to expand institutional investment. It will introduce 'Confidential Compute' technology based on a trusted execution environment (TEE). With the technology applied, institutional investors would be able to conduct large transactions and loans without disclosing sensitive transaction information externally, while the transactions themselves remain mathematically verifiable on the blockchain.

Another challenge also remains for the XRPFi ecosystem to grow in earnest. Lending and liquidity protocols need a sufficient supply of stablecoin liquidity such as USDT and USDC to become active.

Flare management was also reported to have acknowledged in a closed-door setting that securing such stablecoin liquidity is an important task.

The market sees XRP prices, for the time being, as likely to be influenced more by the macroeconomic environment and bitcoin price moves than by individual development results.

Flare's XRPFi expansion strategy points to broadening XRP use from payments to DeFi, but forecasts suggest any price impact the market expects will only appear in earnest after bridge stability is verified and stablecoin liquidity is secured.