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Cardano and XRP Forge DeFi Alliance via Midnight Sidechain

Charles Hoskinson, the visionary founder of Cardano, outlined a strategic move to bring decentralized finance (DeFi) to the XRP ecosystem—without forcing users to migrate assets off the XRP Ledger. At the center of this plan is Midnight, Cardano’s privacy-focused sidechain designed to extend DeFi capabilities to XRP holders.

Source: X

Unlocking DeFi on XRP—Without Migrating Assets

In a recent Ask-Me-Anything session, Hoskinson confirmed that the Midnight protocol will enable XRP holders to access features like staking, lending, and liquidity pools while keeping their tokens on the XRPL. The key innovation is a trustless bridge allowing XRP to interact with Midnight’s smart contract framework, preserving asset custody on the original chain.

This integration addresses XRP’s long-standing limitation: the inability to support native smart contracts. By using Midnight, holders gain financial utility without sacrificing security or fragmenting the ecosystem.

Privacy at the Core: Zero-Knowledge Smart Contracts

Midnight distinguishes itself by embedding zero-knowledge cryptography to ensure transaction confidentiality. Users can participate in DeFi—such as leveraged lending or secret voting—without exposing wallet balances or transaction details on-chain.

This layer of privacy is expected to appeal to institutional investors and privacy-conscious individuals who require discretion in their financial interactions.

Wallet Evolution: Lace Gains XRP Support

Beyond protocol integration, Cardano’s Lace Wallet is set to support XRP, enabling seamless management of ADA, XRP, and other major assets from a single interface—without needing multiple wallets.

This feature significantly lowers user friction and promotes a multi-asset management experience under one trusted application.

RLUSD: A USD-Pegged Linchpin

Looking ahead, Cardano and Ripple are exploring the integration of RLUSD, a USD-backed stablecoin proposed by Ripple. Embedding RLUSD into Midnight would provide vital liquidity for DeFi markets built atop the sidechain.

Source: X

This move would effectively combine RLUSD’s price stability with XRP’s liquidity—further strengthening the foundation for DeFi use cases.

Dual Airdrops: Midnight and Glacier Programs

To kickstart adoption, Cardano has launched two token distribution initiatives:

• Midnight Drop & Glacier Drop: XRP holders who held at least $100 worth of XRP by June 11, 2025, are eligible to claim part of 1.2 billion NIGHT governance tokens 

• Extended support: Participants across multiple chains—Ethereum, Solana, Avalanche, and XRP—are included in the campaign 

These airdrops aim to create a core user base and spark initial governance participation.

A Multi‑Chain Future: Mainnet Launch on Horizon

Midnight is live on testnet and expected to launch on mainnet in late 2025. It will support interoperability with Ethereum, Solana, Avalanche—and critically, XRPL—making it a true multi-chain DeFi hub 

This cross-chain capability positions Midnight as a game-changing layer in the evolving decentralized finance landscape.

Strategic Implications

• For XRP: Offers new utility without forcing asset migration—sending, staking, and liquidity pooling can happen natively.

• For Cardano: Enlists the XRP community and enhances Lace Wallet’s portfolio.

• For Crypto at large: Models a cooperative—rather than adversarial—approach to blockchain ecosystems.

What Lies Ahead?

Challenges remain: implementing secure bridges, ensuring token audits, and coordinating governance structures across chains. Moreover, Ripple’s regulatory standing could impact speed of deployment. But with Hoskinson in discussions with Ripple leadership, including CEO Brad Garlinghouse and CTO David Schwartz, both camps appear committed to technical alignment 

As Midnight transitions from testnet to mainnet, full wallet support and RLUSD integration could materialise early in 2026. The first DeFi apps may follow soon after, with governance and privacy features taking shape.

Conclusion

This landmark collaboration between Cardano and Ripple signals a proactive shift in DeFi philosophy: interoperability and cooperation over siloed ecosystems. By combining Midnight’s privacy and smart contracts with XRPL’s speed and liquidity, this partnership could unlock DeFi for millions. It’s a promising step toward a more unified, multi-chain future—and one that could set new standards for blockchain synergy.

Writer @Ellena

Ellena is an experienced crypto writer who loves to explore the intersection of blockchain technology and financial markets. She regularly provides insights into the latest trends and innovations in the digital currency space.

 

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