Cardano founder Charles Hoskinson claims that integrating Midnight with XRP Ledger-based DeFi could fundamentally disrupt the traditional banking system.
In a recent commentary, Hoskinson outlined plans to introduce more efficient and potentially profitable return opportunities for XRP.
He did not provide specific details about the initiative, but promised to intensify discussions next year. He recently revealed how such consolidation could pose challenges to traditional financial institutions.
Midnight-XRP DeFi integration will disrupt legacy banks
In a widely shared social media statement, Hoskinson claimed that integrating Midnight with XRPL DeFi has the potential to “blow traditional banks out of the water.”
In particular, Cardano’s privacy sidechain, Midnight, is built to support confidential smart contracts while complying with regulatory requirements. This allows regulators and institutions to verify transactions through selective disclosure if necessary, while keeping sensitive financial data private on-chain.
The XRP Ledger, on the other hand, has long been known for its fast and low-cost payments and institutional-grade infrastructure. However, its DeFi ecosystem lags behind networks such as Ethereum and Solana due to the lack of native smart contract functionality.
While several projects, including Flare, have introduced DeFi solutions for XRP, adoption remains relatively modest when compared to more established DeFi platforms.
Despite these limitations, Hoskinson argued that the combination of XRP’s fast payments layer and Midnight’s privacy smart contracts can create a financial system that operates more efficiently than traditional banks.
Will XRP DeFi address the shortcomings of the traditional banking model?
His comments reflect a widely held belief that banks rely on outdated and slow infrastructure. In contrast, the XRP DeFi environment powered by Midnight can offer near-instant payments, low costs, and programmable financial products while maintaining compliance and privacy.
Such a system could replicate core banking functions such as payments, lending, and settlement without friction with intermediaries.
Notably, this is not the first time Hoskinson has cited Midnight and XRP to challenge the capabilities of legacy finance. Just last week, he claimed that both XRP and Midnight are “100 times” more advanced than traditional financial systems, especially in the area of real world asset (RWA) tokenization.
After debate over the accuracy of that claim, Ripple’s chief technology officer (CTO) David Schwartz publicly acknowledged the privacy-focused blockchain. This recognition sparked a positive exchange, and Mr. Hoskinson expressed his appreciation for Mr. Schwartz’s remarks.
Hoskinson revealed plans to ramp up efforts on the XRP DeFi initiative, but specific details about when a fully functional product will be brought to market have not yet been disclosed.