The XRP Ledger is moving closer to implementing native lending functionality as two related amendments advance through validator voting. XLS-65 and XLS-66 would introduce vault-based liquidity and fixed-term credit mechanisms directly to the network without requiring external smart contracts.
XRPL Commons promoted the proposals during its Lending and Borrowing hackathon track in New York, incentivizing developers to build applications for credential-based lending, secondary markets, risk tools, and user interfaces.
How the Amendments Would Function
XLS-65 would enable Single Asset Vaults, allowing users to combine single assets and receive shares corresponding to their positions. These vaults could include XRP, issued assets, and tokenized real-world assets depending on the final implementation.
XLS-66 would utilize those vaults to support fixed-term loans directly on the XRP Ledger. Credit checks and underwriting would occur off-chain, while loan creation, repayments, and defaults would be recorded on-chain.
Both amendments require continued validator approval to activate on mainnet. XRPL amendments generally need more than 80% validator support for two continuous weeks before taking effect.
Institutional Finance Focus
The proposed lending system emphasizes fixed-term credit rather than the automated collateral liquidation common on many DeFi platforms. This structure could support business lending, working capital, and institution-focused credit products on the XRPL.
The LendingProtocolV1_1 design incorporates closed-ended vaults with fixed subscription, investment, and redemption periods. It also employs cash-basis accounting, recognizing interest when payments are actually received.
The protocol can include first-loss capital from loan brokers to absorb portions of defaults, though borrower assessment and risk evaluation would remain subject to external underwriting by market participants.
Additional Amendments Progressing
The lending proposals advance alongside other enhancements to the XRPL. PermissionDelegationV1_1 may activate on October 5th if sufficient validator support continues. This amendment would allow one account to grant another account limited authority without sharing full signing control, potentially enabling companies to divide compliance, payment, and operational tasks across multiple accounts.
Batch V1.1, scheduled for possible activation on September 29th, would permit grouped transactions to settle together or fail together.
The activation of XLS-65 and XLS-66 remains conditional on validator approval, with no confirmed activation dates set.
