XRP Ledger Unveils Decentralized On-Chain Lending Protocol

The XRP Ledger blockchain is getting a groundbreaking new feature that allows direct lending and borrowing between users in a decentralized, censorship-resistant manner without intermediaries. This mechanism ensures financial inclusion, transparency, and efficiency like never before.

Ripple’s technical development arm, RippleX, unveiled the proposal “XRP Ledger-Native Lending Protocol” or XLS-66d on their GitHub repository yesterday, April 12, 2024. The proposal outlines how the XRP Ledger will natively host on-chain lending and borrowing pools.

Furthermore, with this protocol, users can seamlessly deposit fungible tokens such as XRP, wBTC, and wETH into these lending pools to earn interest on their holdings. Additionally, new on-chain actors, termed “pool delegates,” will be responsible for managing the operations of these lending pools, attracting liquidity, and facilitating loan provision.

XRPL native lending To enable A variety of use scenarios

This lending protocol’s fully decentralized architecture mimics the features of the most popular decentralized finance (DeFi) systems already in use. Borrowers and pool representatives will negotiate loan conditions off-chain and subsequently record them on-chain through a recently added “loan” ledger item. Without requesting collateral from borrowers, this loan object will manage every part of the lending process, including funding, withdrawals, payments, and interest rate requirements.

RippleX further highlighted in their announcement how crucial this protocol is to the XRP Ledger and the DeFi ecosystem, saying it “enables fixed-term loans with pre-set interest terms” and “bypasses the need for collateral through off-chain underwriting and risk management.” The “modular, extensible design makes it easy to build and integrate lending dApps on XRPL, unlocking a wide range of use cases,” they emphasized for developers.

The XRP community has welcomed this development, with prominent member @WKahneman noting the potential boost to the XRP Ledger’s real-world assets segment. This lending protocol follows the recent upgrade to the XRP Ledger’s automated market maker design, further enhancing its DeFi capabilities.

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