Ripple proposes XRPL lending protocol for institutions

A new proposal for the XRP Ledger aims to create a standardized lending infrastructure for financial institutions, allowing them to borrow against tokenized assets they hold on the blockchain. The XRPL Lending Protocol, detailed by Ripple on June 29, is designed to keep credit underwriting and compliance decisions offchain while automating loan servicing, repayment, and default mechanics directly on the XRP Ledger.

The framework consists of two core technical specifications, XLS65 and XLS66. The first establishes a Single Asset Vault for pooling a single type of digital asset, such as a stablecoin or tokenized treasury. The second defines a Lending Protocol layer that originates loans from that pooled liquidity under predefined terms. This separation is intended to let institutions retain control over credit decisions while leveraging the blockchain for consistent, automated execution of agreed-upon loan terms.

Ripple argues this hybrid model addresses a gap in existing onchain finance. While public decentralized finance protocols like Aave and Compound have demonstrated scalable lending, their cryptonative governance and dynamic risk models can be difficult for traditional...