XRP holders could soon access significantly better DeFi yields, thanks to an initiative proposed by Cardano founder Charles Hoskinson. His vision includes integrating XRP into Cardano’s privacy-focused sidechain, Midnight, turning it into a powerful decentralized finance (DeFi) platform for XRP investors.

During a recent livestream, Hoskinson shared that Midnight could serve as the DeFi layer for XRP, allowing holders to earn passive rewards. The proposal has gained attention across the crypto community, especially after a popular Cardano-focused platform shared a clip of Hoskinson discussing this idea.

While many see Cardano and XRP as two separate ecosystems, Hoskinson’s push to bring them closer via Midnight marks a significant shift in cross-chain collaboration. At its core, the proposal seeks to bridge XRP to Cardano’s DeFi infrastructure, providing real utility and yield opportunities to a user base historically underrepresented in DeFi.

Midnight: A Privacy-First Sidechain with DeFi Potential

To understand how this collaboration might unfold, it’s important to look at Midnight itself.

Midnight was first introduced by Hoskinson back in 2022 as a sidechain that prioritizes data protection and privacy. Designed with developers in mind, it uses an extended UTXO model — an upgraded version of Bitcoin’s transaction system — to enable private smart contract execution without changing Cardano’s base layer.

By 2024, Midnight had entered the testnet phase under Cardano’s R&D team, Input Output Global (IOG). The sidechain has since evolved into a modular framework that can support DeFi applications while maintaining high levels of privacy.

Crucially, Midnight allows assets from other blockchains to be bridged and used in its ecosystem. This is where XRP enters the picture. While XRP itself doesn’t natively support smart contracts, bridging it to Midnight could open doors to yield farming, staking, and liquidity provision—all key aspects of DeFi.

Hoskinson’s Proposal: A DeFi Home for XRP

According to Hoskinson, XRP holders could bridge their tokens to Midnight and deposit them into Cardano-based DeFi protocols. These protocols, built on Midnight’s privacy layer, would offer better returns compared to centralized staking platforms or traditional exchanges.

“The goal is to let XRP holders access real DeFi rewards, not just speculative price action,” said Hoskinson during his broadcast. This initiative could provide a unique value proposition for XRP holders who’ve long awaited more real-world use cases for their holdings.

Midnight would essentially act as a decentralized rewards platform for XRP, enabling token holders to earn passive income while contributing to the liquidity and strength of the broader DeFi ecosystem.

This isn’t the first time Hoskinson has extended an olive branch to the XRP community. Earlier in 2025, he confirmed that XRP addresses would be eligible for an upcoming token drop from the Midnight project.

Airdrops and Cross-Ecosystem Integration

Dubbed the “Glacier Drop,” this airdrop is designed to distribute two new tokens, NIGHT and DUST, to a wide range of blockchain addresses, including XRP Ledger (XRPL) wallets. A total of 37 million addresses across various networks are eligible to participate.

By involving XRP holders in this drop, Midnight is already fostering early adoption and cross-chain engagement. According to the Midnight development team, this airdrop will be a stepping stone toward deeper integration between the Cardano and XRP communities.

As the Midnight sidechain approaches its mainnet release later this year, the anticipation surrounding its use cases continues to grow. And with XRP now being positioned as a key player within Midnight’s DeFi ambitions, many believe this could be a pivotal moment for both ecosystems.

Beyond Midnight: Hoskinson’s Full Vision for XRP

While the integration of XRP into Midnight is a major highlight, Hoskinson has hinted at other initiatives aimed at welcoming XRP into the Cardano ecosystem.

For example, in April 2025, he confirmed that XRP would be added to Lace, Cardano’s non-custodial wallet platform. This move would make it easier for users to manage both ADA and XRP within the same user-friendly interface.

There are also ongoing discussions about bringing Ripple USD (RLUSD)—a stablecoin issued on the XRP Ledger—into the Cardano ecosystem. While no formal integration has occurred yet, Hoskinson suggested it’s part of a larger plan to strengthen Cardano’s stablecoin infrastructure.

In his words, these various initiatives amount to “a whole package” for XRP holders. From DeFi and yield farming to wallet support and airdrops, the vision is comprehensive.

How XRP Would Benefit from Midnight’s DeFi Capabilities

The core value proposition of bringing XRP to Midnight lies in enabling yield opportunities that XRP alone cannot offer. Unlike other Layer-1 tokens like Ethereum or Solana, XRP was not designed with smart contract support in mind. This has limited its ability to participate in modern DeFi innovations.

However, if XRP can be bridged to a sidechain like Midnight—one that supports privacy-enhanced smart contracts—it effectively gains access to an entirely new financial toolkit. Users could:

• Earn yields through liquidity pools

• Participate in privacy-first DeFi platforms

• Stake XRP to secure protocols or access governance features

• Use DUST and NIGHT tokens for gas or governance on the Midnight chain

This would put XRP holders in a position similar to users of Ethereum-based tokens, with the added benefit of Cardano’s security and privacy infrastructure.

Competitor Moves: Uphold and Flare

Interestingly, this isn’t the first attempt to bring yield-generating functionality to XRP. In recent weeks, crypto exchange Uphold partnered with Flare Network to allow XRP users to earn rewards via decentralized applications (dApps) and smart contracts.

Uphold’s initiative is still in the early stages, but it reflects a growing trend of platforms trying to provide yield options for XRP holders. Flare Network, with its focus on smart contract compatibility, is also creating bridges for XRP to access the wider DeFi world.

Still, Hoskinson’s proposal through Midnight is seen as a more privacy-focused and potentially scalable alternative—especially if it achieves deep integration within the Cardano ecosystem.

Can This Move Help Reposition XRP?

XRP has long been a controversial yet resilient asset in the crypto space. While Ripple’s ongoing legal battles with the SEC have held the token back in terms of mainstream adoption, many investors remain bullish on its long-term potential.

Now, with a chance to participate in Cardano’s DeFi network, XRP could see renewed relevance. It might also attract new holders who are interested not just in price speculation but in earning steady yields on their assets.

Midnight could serve as a crucial unlock mechanism, turning XRP into a productive asset—something long sought after by its community.

Looking Ahead

As we move into the second half of 2025, all eyes are on the Midnight mainnet. If successful, it could become one of the most impactful sidechains in the Cardano ecosystem. For XRP holders, it opens new doors—reward-based systems, staking, yield farming, and more.

This integration might also represent a broader trend in crypto: the merging of ecosystems that were previously siloed. Rather than working in isolation, networks like Cardano and XRP are starting to collaborate, offering more value to their users.

For now, XRP holders can look forward to the Glacier Drop, DeFi integration, and possible wallet and stablecoin support—all being championed by none other than Charles Hoskinson himself.

While it remains to be seen how deeply these initiatives will penetrate the XRP community, one thing is clear: The days of passive holding may soon give way to active participation.

And for many XRP investors, that’s a welcome shift.