The XRP Ledger is considering new rules for native lending that would require loan brokers to use closed-ended vaults, restricting depositor withdrawals during active lending periods. According to a Nov. 12 snapshot, proposed amendments for LendingProtocol, LendingProtocolV1_1, and SingleAssetVault had garnered between 22 and 23 votes among 35 trusted validators, with a 29-vote threshold required. XRPL's amendment rules require more than 80% support maintained for two weeks before activation.
Under the proposed V1.1 rules, newly created loan brokers would be required to attach to closed-ended vaults. Brokers established before the amendment activates could continue using open-ended vaults under existing terms.
How the Vaults Would Function
The proposed mechanism divides vault operations into distinct phases. During subscription, depositors can add assets and withdraw freely. Once the investment period begins, both deposits and withdrawals are blocked, though capital can fund loans. A redemption phase reopens withdrawals while barring new deposits and loans.
When XRP is lent, depositors hold a claim represented by vault shares while borrowers control the disbursed tokens. Interest paid by borrowers could increase the value of those shares, while defaults would reduce them. The shares remain denominated in XRP without guaranteeing the exact number of tokens recovered.
Risks and Protections
XRPL's lending design uses fixed-term, uncollateralized loans with off-chain underwriting. This means depositors assume exposure to borrower repayment ability and the broker's credit decisions. A broker may optionally deposit assets in a separate account to buffer defaults, but this protection is neither required nor guaranteed to prevent losses.
V1.1 would also establish cash-basis accounting for newly created vaults, with interest recognized when paid. Vaults created under earlier rules would retain whole-life accounting, booking scheduled interest at loan origination.
Current Status and Next Steps
Native lending remains unactivated as of the Nov. 12 snapshot. Ripple announced in October that its first lending phase would provide RLUSD working capital on XRPL before transitioning to native lending infrastructure. For XRP vault holders, key tests ahead include amendment activation, funded vaults, borrower drawdowns, interest payments, defaults, and repayments. The viability of early share sales would separately demonstrate whether depositors can exit before the redemption phase.
