Ripple plans to introduce an institutional-grade lending protocol on XRPL, allowing financing using tokenized assets as collateral

According to Odaily, Ripple is driving the addition of a layer of lending infrastructure on the XRP Ledger (XRPL), enabling institutions to raise funds using on-chain tokenized assets as collateral. The protocol will automatically execute loan terms, while credit assessment and lending decisions remain with off-chain institutions.

The proposal, named XRPL Lending Protocol (corresponding to XLS-65 and XLS-66 standards), is currently in the technical draft stage. It will only be launched on the mainnet after being approved by a validator vote, but developer trials are already available on the testnet.

The protocol design divides the lending process into two parts: on-chain management of liquidity pools, interest calculation, repayment execution, and default handling mechanisms; while borrower credit assessment and loan term setting remain in the hands of traditional financial institutions to comply with regulatory requirements in different jurisdictions.

Ripple stated that this mechanism is primarily aimed at meeting institutional short-term liquidity needs. For example, in cross-border payment scenarios, temporary financing can be obtained through stablecoins or collateralized assets before settlement is completed, thereby improving capital efficiency.

Analysts believe that while this solution attempts to maintain the open network attributes of XRPL, it also introduces a "rule-codified lending infrastructure" similar to traditional finance. However, it still faces competition from established on-chain lending protocols such as Aave, Compound, and Maple. (CoinDesk)