Svmuu News: Ripple is promoting the addition of a new layer of lending infrastructure on the XRP Ledger (XRPL), enabling institutions to secure financing using on-chain tokenized assets as collateral, while the protocol automatically enforces loan terms; credit assessments and lending decisions, however, remain the responsibility of off-chain institutions.
According to disclosures, the proposal—named the XRPL Lending Protocol (corresponding to the XLS-65 and XLS-66 standards)—is currently in the technical draft stage and requires approval via validator voting before it can go live on the mainnet; however, it is already available for developers to test on the testnet.
The protocol is designed to split the lending process into two parts: on-chain mechanisms handle pool management, interest calculation, repayment execution, and default resolution; while borrower credit assessment and the setting of loan terms remain with traditional financial institutions to meet compliance requirements across different jurisdictions.
Ripple states that this mechanism is primarily aimed at meeting institutions’ short-term liquidity needs—for example, in cross-border payment scenarios, where stablecoins or collateralized assets are used for temporary financing prior to settlement to enhance capital efficiency.
Analysts believe this solution attempts to introduce a “rule-based lending infrastructure” similar to that of traditional finance while maintaining the open-network nature of the XRPL; however, it still faces competition from mature on-chain lending protocols such as Aave, Compound, and Maple. (CoinDesk)