Hoskinson Wants Midnight to Unlock XRP DeFi Potential

Charles Hoskinson, the founder of Cardano, has made a pitch that is turning heads across the crypto world. Speaking on The O Show with Wendy O, he argued that Ripple should integrate Midnight, a privacy-focused sidechain built by Input Output Global, to push XRP into DeFi, tokenization, and institutional finance. The number he put on the opportunity: over $100 billion.

Why XRP Cannot Easily Step Into DeFi

The XRP Ledger is built for one purpose above all else: fast, low-cost payments. It processes around 1,500 transactions per second with three to five second finality, making it a proven backbone for cross-border settlement and institutional transfers.

That same focused design, however, is also a ceiling.

XRPL does not support the kind of composable smart contracts that power DeFi on Ethereum and Solana. Smart contracts did reach XRPL’s AlphaNet in November 2025, but mainnet rollout is still ongoing. Even Ripple’s own CTO, David Schwartz, has publicly acknowledged that XRPL does not need to be the “best smart contract platform” and that the network only needs a minimal degree of programmability to serve its core mission.

This design reality means XRP holders today have no native way to earn yield, participate in lending markets, or access automated liquidity pools on the main chain. That structural gap is exactly what Hoskinson says Midnight can solve.

What Midnight Brings to the Table

Midnight is a privacy-focused sidechain developed by IOG, the same organization behind Cardano. Introduced in late 2022 and detailed in a September 2023 whitepaper, it uses zero-knowledge proofs to enable confidential smart contracts across multiple blockchains, including the XRP Ledger.

What sets it apart from other DeFi platforms is how it handles privacy and compliance together:

• Selective Disclosure: Institutions can prove regulatory compliance without exposing full transaction details to anyone on the public ledger.
• Dual-Ledger Architecture: A public coordination layer handles consensus while sensitive data stays protected in a shielded private execution layer.
• Cross-Chain by Design: Built as a sidechain rather than a layer-2, Midnight can connect to Bitcoin, Ethereum, Solana, and XRP on roughly equal terms.
• Developer-Friendly Build: Smart contracts are written in Compact, a TypeScript-based language, letting mainstream developers build ZK-powered applications without advanced cryptography expertise.

Midnight’s rollout is already underway and progressing on a clear timeline:

Under Hoskinson’s proposal, XRP would be wrapped onto Midnight through a cross-chain bridge, giving XRP holders direct access to DeFi protocols with transaction privacy preserved. He framed it plainly: “We have Bitcoin DeFi. We’re going to do XRP DeFi.”

The $100 Billion Claim and What It Actually Means

Hoskinson put a headline number on his pitch: over $100 billion in idle XRP liquidity waiting to be unlocked. That figure has generated both excitement and serious pushback from analysts.

The number appears to reflect XRP’s total market capitalization, reframed as dormant on-chain capital. Market cap and deployable DeFi liquidity are two very different things, and no independently audited methodology supports this estimate.

What is accurate, however, is the core premise: a massive amount of XRP sits in wallets today generating no yield, not because holders do not want returns, but because XRPL’s base layer infrastructure cannot yet support those activities at scale.

Hoskinson’s bigger argument points well past XRP to the $10 trillion real-world asset tokenization market. His position is that institutions will only tokenize at scale on chains that combine privacy, compliance, and interoperability in a single environment. That is exactly the environment Midnight is designed to create.

XRPL Is Already Attracting Serious Institutional Players

You do not need Hoskinson’s projection to see that institutional interest in XRPL is real and growing.

On May 6, 2026, Ondo Finance, JPMorgan’s Kinexys platform, Mastercard, and Ripple completed the first cross-border, cross-bank redemption of tokenized U.S. Treasuries on the XRP Ledger. The XRPL leg of the transaction settled in under five seconds. What traditionally takes one to three business days through correspondent banking was completed in near real time, outside standard banking hours.

“By connecting public blockchain infrastructure with interbank settlement rails, we are laying the groundwork for 24/7 global markets that never close.” – Ondo Finance President Ian De Bode, May 6, 2026

Tokenized real-world assets on the XRP Ledger have now crossed $3 billion in total value, and that milestone was reached without any Midnight integration in place.

Hoskinson’s core point cuts through the celebration, though. These pilots operate on a fully transparent public ledger. For institutions managing sensitive client portfolios and proprietary trading strategies, that level of open visibility is a real barrier to deeper participation. Midnight’s zero-knowledge proof design directly addresses this by allowing institutions to verify compliance without ever revealing the underlying transaction data.

No Partnership Signed Yet, But the Door Is Open

As of today, no formal integration agreement between Ripple and Midnight exists. Discussions between Ripple executives and IOG have reportedly taken place, but no technical roadmap or official announcement has followed.

The positive signals from both camps, however, are hard to miss.

Ripple CTO David Schwartz publicly acknowledged Midnight after Hoskinson’s initial comments, sparking an exchange that Hoskinson himself described as encouraging. Hoskinson has since indicated plans to push XRP DeFi development forward, with developers inside the Midnight ecosystem already said to be exploring XRP-related applications. Midnight’s own Glacier Drop distribution also included XRP holders as eligible participants, a detail that suggests the XRP community was part of the long-term cross-chain vision from the beginning.

Not everyone agrees this is the obvious path. Critics including Zenith co-founder Heslin Kim have argued that the Canton Network already holds the institutional adoption Hoskinson is chasing, pointing to DTCC’s recent partnership with Digital Asset to tokenize U.S. Treasury securities on the Canton Network following direct SEC approval. Hoskinson has fired back, insisting XRP and Midnight are already operating at a scale “100x beyond” what the Canton Network envisions.

XRP has built one of the strongest institutional payment records in crypto, but the next chapter of the industry is being written around programmable privacy, on-chain lending, and real-world asset tokenization at a scale the world has never seen. Hoskinson’s Midnight pitch may not yet carry a signed deal, but it has put a spotlight on a real gap that Ripple and the XRP community will need to address to stay ahead as the competition for institutional DeFi infrastructure heats up. The institutions are already at the door, the technology is built and shipping, and the question now is who closes the gap first. What do you think: is Midnight the missing piece XRP needs, or does Ripple already have a path on its own? Drop your thoughts in the comments below.