A new standard for XRPL would allow institutions to secure loans using tokenized assets, with the blockchain ensuring compliance with loan terms while credit evaluations remain with human teams. This initiative still requires validator consent to become operational.
By Shaurya Malwa|Edited by Stephen Alpher Jun 29, 2026, 3:00 p.m. 2 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on SummaryShow- Ripple has introduced an XRPL Lending Protocol aimed at enabling institutions to borrow against on-chain assets while keeping credit assessments off the blockchain.
- This system will aggregate individual assets in “Single Asset Vaults” and manage loan processes at the foundational level of the XRP Ledger, with features currently operational only on a test network, pending validator approval.
- Targeting institutional clients and competing with platforms like Aave and Compound, Ripple contends that its fixed, network-level regulations provide more reliable risk assessments compared to crypto-native governance mechanisms.
Ripple is working to enhance the XRP Ledger, the underlying blockchain for XRP, to allow institutions to borrow against their on-chain assets rather than merely transferring or issuing them.
The proposed XRPL Lending Protocol, which has been shared with CoinDesk, is based on a clear division of responsibilities. The blockchain will manage the operational aspects of loans once they are agreed upon, such as how funds are pooled, interest accrual, repayment enforcement, and handling defaults, while the actual credit evaluations will be conducted by the lending institutions off the blockchain.
This approach suggests that while blockchains excel at enforcing rules consistently, they lack the ability to assess creditworthiness or interpret varying jurisdictional regulations, which is why these evaluations should remain with experienced personnel.
The protocol comprises two components. A Single Asset Vault will consolidate a single asset, and the lending layer will transform that pooled capital into loans with predetermined conditions. Both components are still in the proposal stage, outlined in technical drafts labeled XLS-65 and XLS-66, and require approval from the validators overseeing the network. Testing is currently available on a development network.
The initial use case highlighted by Ripple is short-term financing. For example, a payments company holding reserves in RLUSD, its stablecoin pegged to the US dollar, might require cash for outgoing payments before a cross-border settlement is finalized two days later.
Rather than relying on a bank credit line or liquidating assets, it could borrow against the expected settlement through an authorized pool, with repayment automatically enforced.
This initiative is distinct from XRP, the network's well-known token, and RLUSD, which represents one of the assets that could be utilized for borrowing. The infrastructure is designed for institutional use, not for retail consumers.
However, Ripple is entering a highly competitive arena. On-chain lending is already prevalent through platforms like Aave, Compound, Maple, and Clearpool, which collectively manage billions in deposits.
Ripple argues that existing systems are built around crypto-native governance, where protocols can alter risk parameters through community votes, a feature that institutions find difficult to predict. Its strategy is to establish fixed lending processes at the network's core to prevent any changes that could affect lenders while maintaining a public network instead of restricting access to a closed group like some permissioned systems.
The XRPL Lending Protocol (XLS-65, XLS-66) proposals await validator approval in the upcoming weeks. Infrastructure developers can commence integration and testing on a testnet starting Monday.
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