Key facts
- Ripple has proposed the XRPL Lending Protocol for the XRP Ledger.
- The protocol will enable institutions to borrow against on-chain assets like tokenized treasuries, stablecoins, and commodities.
- Loan servicing, interest calculation, and repayment management will be automated on-chain.
- Credit decisions and compliance checks will remain off-chain, managed by the participating institutions.
- The proposals, known as XLS-65 and XLS-66, are currently in draft form and require approval from XRPL validators.
- The protocol is available for testing on the XRPL devnet.
Ripple has introduced a new lending plan for the XRP Ledger (XRPL) aimed at institutional clients, designed to allow financial institutions to borrow tokens against on-chain assets. This initiative seeks to address what Ripple identifies as a gap in blockchain-based finance, where credit infrastructure has lagged behind the ease of issuing and transferring digital assets.
The XRPL Lending Protocol proposes to automate loan servicing, repayments, interest calculations, and the management of loan defaults on-chain. However, critical credit decisions and compliance checks will be conducted off-chain by the lending institutions themselves. Ripple stated this deliberate choice separates credit judgment from the blockchain's execution capabilities, acknowledging that while blockchains excel at consistent rule enforcement, they cannot replicate human judgment on creditworthiness or navigate complex jurisdictional requirements.