The XRP Ledger (XRPL) is currently reviewing a new draft lending standard, designated as XLS-66, which aims to facilitate fixed-term loans funded through pooled assets. The proposal relies on the XLS-65 Single Asset Vaults framework, allowing depositors to place assets into a vault in exchange for shares that represent their ownership stake in the pool.
Structure of the Proposed Lending Pools
Under the XLS-65 framework, depositors receive shares reflecting their contribution, though these shares do not guarantee immediate access to cash once the pool funds active loans. Each pool requires established withdrawal rules detailing whether requests enter a queue, what lending limits apply, and how much liquid capital remains available.
Loan brokers would manage these lending pools, set fees, approve loans, and determine first-loss capital requirements. The structure can support XRP, issuer-backed assets, or Multi-Purpose Tokens, with pool access configured as either public or restricted.
Loan Management and Off-Chain Credit Checks
The XLS-66 proposal would enable a broker and borrower to establish a loan detailing the principal, interest rate, payment schedule, maturity date, and grace period. The ledger would track unpaid principal and interest, while supporting late-interest rules, origination fees, and early repayment charges. If a borrower misses payments beyond the grace period, the broker can mark the loan as impaired or defaulted.
Because the proposal centers on uncollateralized lending without automatic collateral sales or forced liquidations, credit checks and borrower assessments would occur off-chain. Brokers would evaluate borrowers using financial records, legal agreements, guarantees, or trading history. Additionally, brokers would have the option to post first-loss capital to absorb a portion of potential defaults.
Adoption Requirements
The XLS-66 proposal remains a draft and is dependent on both XLS-65 and XLS-64 standards. Full adoption requires formal standard approval, active participation from brokers and borrowers, and clearly defined pool terms.
