Ripple plans to introduce an institutional-level lending protocol in XRPL that allows tokenized assets to be used as collateral for financing

Comparatively, Ripple is promoting the addition of a layer of lending infrastructure to the XRP Ledger (XRPL), enabling institutions to use on-chain tokenized assets as collateral for financing, while the agreement automatically enforces loan terms, while credit evaluation and lending decisions are still made by off-chain institutions.

According to reports, the proposal is called XRPL Lending Protocol (corresponding to XLS-65 and XLS-66 standards). Currently, it is still in the technical draft stage. It needs to be voted and approved by validators before it can be launched on the main network, but it has already been tested by developers on the test network.

The design of the agreement divides the loan process into two parts: the chain is responsible for mechanisms such as fund pool management, interest calculation, repayment execution, and default processing; while borrower credit evaluation and loan clause settings are kept in the hands of traditional financial institutions to meet the compliance requirements of different jurisdictions.

Ripple said that the mechanism mainly targets short-term liquidity needs of institutions. For example, in cross-border payment scenarios, temporary financing is carried out through stablecoins or collateral assets before settlement is received to improve capital efficiency.

Analysts believe that while maintaining XRPL's open network attributes, the solution aims to introduce a “rule-fixed lending infrastructure” similar to traditional finance, but it still needs to face competition from mature on-chain lending agreements such as Aave, Compound, and Maple.

This article is sponsored by GENG, Build Your Fortune on GENG (https://geng.one)