Charles Hoskinson, the founder of Cardano, has proposed an initiative that could bring significantly higher decentralized finance (DeFi) yields to the XRP ecosystem. By integrating XRP into Cardano’s privacy-focused sidechain, Midnight, Hoskinson aims to create a powerful DeFi platform tailored for XRP investors. This proposal has generated considerable interest across the cryptocurrency community.
During a recent livestream, Hoskinson explained that Midnight could serve as a dedicated DeFi layer for XRP, allowing holders to earn passive rewards through various yield-generating mechanisms. This vision represents a notable shift toward cross-chain collaboration, potentially bridging two major ecosystems for mutual benefit.
Understanding Midnight: A Privacy-Focused Sidechain
Midnight was first introduced by Charles Hoskinson in 2022 as a data-protection-oriented sidechain. Designed with privacy and flexibility in mind, it utilizes an extended UTXO model—an evolution of Bitcoin’s transaction architecture—to enable confidential smart contract execution without modifying Cardano’s base layer.
By 2024, Midnight had advanced to its testnet phase under the development of Input Output Global (IOG), Cardano’s research and development team. The sidechain has since matured into a modular framework capable of supporting sophisticated DeFi applications while preserving user privacy.
A key feature of Midnight is its ability to bridge external assets from other blockchains. This functionality is central to Hoskinson’s proposal, as it would allow XRP—a token not natively supporting smart contracts—to participate in DeFi activities such as yield farming, staking, and liquidity provision.
Hoskinson’s Proposal: DeFi Opportunities for XRP Holders
Under Hoskinson’s plan, XRP holders would bridge their tokens to the Midnight sidechain and deposit them into Cardano-based DeFi protocols. These protocols, operating within Midnight’s privacy-enhanced environment, are expected to offer more attractive returns compared to centralized staking services or conventional exchanges.
Hoskinson emphasized that the initiative is aimed at providing “real DeFi rewards, not just speculative price action.” For XRP investors who have long sought more practical utility for their holdings, this represents a compelling value proposition.
Midnight would effectively function as a decentralized yield platform for XRP, enabling holders to generate passive income while contributing to broader DeFi liquidity and ecosystem resilience.
This is not the first time Hoskinson has reached out to the XRP community. Earlier in 2025, he confirmed that XRP addresses would be eligible for an upcoming token distribution event known as the “Glacier Drop.”
Airdrop Initiatives and Cross-Chain Engagement
The Glacier Drop is designed to distribute two new tokens—NIGHT and DUST—to a wide array of blockchain addresses, including those on the XRP Ledger (XRPL). With eligibility extended to 37 million addresses across multiple networks, this airdrop aims to foster early adoption and encourage cross-chain participation.
According to the Midnight development team, this token distribution will serve as a foundation for deeper integration between the Cardano and XRP ecosystems. As the sidechain approaches its mainnet launch, anticipation continues to build around its potential use cases—with XRP positioned as a central asset within Midnight’s DeFi framework.
Broader Integration Efforts for XRP
Beyond the Midnight sidechain, Hoskinson has outlined additional initiatives to incorporate XRP into the Cardano ecosystem. In April 2025, he confirmed that XRP would be added to Lace, Cardano’s non-custodial wallet platform. This integration will allow users to manage both ADA and XRP within a single, user-friendly interface.
Discussions are also underway regarding the potential inclusion of Ripple USD (RLUSD)—a stablecoin native to the XRP Ledger—into Cardano’s financial infrastructure. While no formal agreements have been announced, Hoskinson indicated that this forms part of a larger strategy to enhance Cardano’s stablecoin offerings.
Together, these efforts form what Hoskinson describes as “a whole package” for XRP holders, encompassing DeFi yields, wallet support, airdrops, and stablecoin interoperability.
Benefits for XRP in the Midnight Ecosystem
The primary advantage of integrating XRP with Midnight is access to yield-generation mechanisms that the token currently lacks. Unlike Ethereum or Solana, XRP was not designed with native smart contract functionality, limiting its role in modern DeFi ecosystems.
By bridging XRP to Midnight, holders gain exposure to a full suite of DeFi services, including:
- Liquidity pool participation for earning yields
- Privacy-centric DeFi platforms
- Staking mechanisms for protocol security or governance
- Use of DUST and NIGHT tokens for transaction fees and governance
This effectively places XRP holders on par with participants in other smart contract ecosystems, with the added advantages of Cardano’s security and Midnight’s privacy features.
Competitive Landscape: Uphold and Flare Network
Hoskinson’s proposal is not the first effort to introduce yield-generating functionality to XRP. Recently, the cryptocurrency exchange Uphold partnered with Flare Network to enable XRP holders to earn rewards through decentralized applications and smart contracts.
While still in early stages, this initiative reflects a growing trend toward providing DeFi opportunities for XRP investors. Flare Network, which focuses on smart contract compatibility, is also working to connect XRP with the broader DeFi landscape.
However, Hoskinson’s approach through Midnight is distinguished by its emphasis on privacy and its potential for seamless integration within the Cardano ecosystem, positioning it as a scalable and secure alternative.
Potential Impact on XRP’s Market Position
XRP has maintained a prominent yet contentious position within the cryptocurrency market. Ongoing legal challenges between Ripple and the U.S. Securities and Exchange Commission (SEC) have impacted its adoption, but many investors remain optimistic about its long-term prospects.
Participation in Cardano’s DeFi network could renew interest in XRP, attracting investors focused on yield generation rather than pure price speculation. Midnight may act as a catalyst, transforming XRP from a static asset into a productive one—a development long awaited by its community.
Frequently Asked Questions
What is the Midnight sidechain?
Midnight is a privacy-focused sidechain developed within the Cardano ecosystem. It enables confidential smart contracts and allows assets from other blockchains to be used in its DeFi applications while maintaining data protection.
How can XRP holders benefit from this integration?
XRP holders can bridge their tokens to Midnight and participate in yield farming, staking, and liquidity provision. This provides an opportunity to earn passive income through DeFi protocols that were previously inaccessible to XRP investors.
What is the Glacier Drop?
The Glacier Drop is an airdrop event distributing NIGHT and DUST tokens to eligible blockchain addresses, including those on the XRP Ledger. It is designed to encourage cross-chain engagement and early adoption of the Midnight network.
Is XRP supported on Cardano’s Lace wallet?
Yes, Charles Hoskinson has confirmed that XRP will be integrated into Lace, Cardano’s non-custodial wallet, allowing users to manage both XRP and ADA in a single interface.
How does Midnight compare to other solutions like Flare Network?
Midnight emphasizes privacy and is built within the Cardano ecosystem, offering potential advantages in security and scalability. While Flare Network also enables smart contract functionality for XRP, Midnight provides an alternative with a strong focus on data protection.
When will the Midnight mainnet launch?
The mainnet launch is expected in the latter half of 2025. Developers and users can currently experiment with the testnet to explore its features and capabilities.
Looking Ahead
The upcoming mainnet launch of Midnight could mark a significant milestone for both the Cardano and XRP ecosystems. If successful, it may establish a new standard for cross-chain collaboration and DeFi innovation.
For XRP holders, the integration offers access to rewards-based systems, staking, and yield farming—transforming the asset from a holding into a productive investment. This initiative also reflects a broader industry trend toward interoperability, where previously isolated blockchain networks collaborate to deliver enhanced user value.
As these developments unfold, XRP investors can anticipate the Glacier Drop, DeFi integrations, and expanded wallet support—all facilitated through Hoskinson’s cross-ecosystem vision. Explore more strategies for maximizing DeFi yields in a rapidly evolving market.
The era of passive XRP holding may soon give way to active participation, offering renewed relevance and utility for one of cryptocurrency’s most enduring assets.