XRP Supply Squeeze Expected as DeFi Demand Tightens Liquidity

A potential XRP supply squeeze is emerging, fueled by increased locking, tokenization, and deployment within Decentralized Finance (DeFi) ecosystems. Analyst Zach Rector suggests that the long-dismissed "XRP supply shock" could become a market reality.

Key Developments

XRP's circulating supply is being tightened as more assets are locked in the Flare ecosystem.
Zach Rector minted FXRP tokens to explore yield generation through the Flare ecosystem without leaving the XRP Ledger.
4 million XRP, worth over $11.21 million, were locked in escrow within a Flare core vault, reducing active circulation.
Flare aims to tokenize up to 5% of the total XRP supply, potentially impacting liquidity and price if demand increases.
The Flare community views the network's development positively, seeing new yield opportunities for XRP holders.

Flare’s Growing DeFi Role

FXRP activity and Total Value Locked (TVL) have risen sharply since early September 2025, indicating growing DeFi participation.
Increases in FXRP cap trigger financial activity on-chain, positioning Flare as a significant force in XRP's DeFi adoption.
MessariCrypto reports FXRP minting has surpassed 30 million tokens, with a TVL increase of over 25% recently.
Key features like FAssets incentives and liquidity enhancements are transforming XRP into a productive asset.

XRP

This trend points toward an evolving role for XRP within DeFi, potentially impacting its market dynamics significantly.