According to ChainCatcher, Ripple is pushing to add a lending layer on the XRP Ledger (XRPL), enabling institutions to borrow against tokenized on-chain assets as collateral while the protocol automatically executes loan terms. Credit assessment and lending decisions remain off-chain with institutional counterparties.
Proposal Details: XLS-65 and XLS-66 Standards
The proposal, named XRPL Lending Protocol, corresponds to standards XLS-65 and XLS-66. It is currently in a technical draft stage and requires validator voting approval before going live on mainnet, though it is already available for developer testing on the testnet. The design splits lending processes: on-chain handles pool management, interest calculation, repayment execution, and default processing; borrower credit assessment and loan term setting remain with traditional financial institutions to comply with jurisdictional regulations.
Use Cases and Competitive Landscape
Ripple states that the mechanism targets institutional short-term liquidity needs, such as in cross-border payment scenarios where temporary financing via stablecoins or collateral assets is needed before settlement finalization, improving capital efficiency. Analysts suggest the approach aims to introduce a 'rule-formalized lending infrastructure' similar to traditional finance while maintaining XRPL's open network attributes. However, it will face competition from established on-chain lending protocols like Aave, Compound, and Maple.
Market response to Ripple's plan has been positive, but final adoption depends on validator community voting. If approved, XRPL will become another public chain with both payment and lending functions, further expanding its institutional DeFi use cases.