The XRP Ledger Foundation released xrpld 3.4.0 on September 16 with code for closed-ended vaults and cash-basis accounting as part of an evolving lending infrastructure on the network.
The closed-ended vault design moves through three phases: subscription, investment, and redemption. During subscription, depositors can add assets and withdraw shares. At the subscription boundary, the investment phase begins, blocking new deposits and withdrawals while allowing the vault's capital to fund loans. Redemption begins at a fixed date when depositors can withdraw their share of proceeds.
The investment period must be at least 60 seconds and strictly less than 30 years, according to the implementation specifications. Once the investment phase begins, the protocol enforces the advertised lock even if a depositor seeks early withdrawal.
For XRP-denominated vaults, deposited XRP becomes unavailable to that holder until the redemption date. XRP held elsewhere in the same wallet or by holders who never enter the vault remains unaffected by this mechanism.
Cash-Basis Accounting Change
LendingProtocolV1_1 also introduces cash-basis accounting that recognizes interest only when borrowers pay it, rather than when loans are originated. This contrasts with the earlier model, which could record scheduled interest before payment, potentially requiring reversals if borrowers missed payments.
New vaults created after activation will use cash-basis accounting, while vaults created under the earlier model retain their original accounting method. For depositors, this change provides clearer separation between expected and realized returns.
Activation Timeline Remains Uncertain
Activation still depends on XRPL's amendment process. A dashboard snapshot taken September 17 showed the base LendingProtocol amendment at 13 of 35 trusted-validator votes and SingleAssetVault at 16 of 35, below the displayed threshold of 28 votes needed for activation.
LendingProtocolV1_1 was not yet visible in the responding node's feature feed or activation countdown.
Demand Questions Remain Open
Whether the lending infrastructure creates lasting XRP demand depends on decisions by applications, borrowers, and depositors. Applications could build lending pools around issued assets instead of XRP, leaving XRP outside the principal flow.
The underlying credit risks in XRPL's lending design remain substantial. The ledger handles loan origination, payments, and defaults, but off-chain underwriting is required. Borrowers can miss payments, brokers can underwrite poorly, and recoveries can fall short of losses.
Measurable adoption indicators would include the number of XRP-denominated vaults created, total XRP deposited, loan counts and principal originated, repayment rates, and whether depositors renew participation after redemption dates.
