- Ripple has proposed a new XRPL Lending Protocol that would let institutions issue and manage loans backed by tokenized assets.
- The feature is awaiting validator approval before it can launch on the XRP Ledger.
Ripple has introduced a new proposal that could expand lending on the XRP Ledger by giving institutions a standardized way to issue and manage loans backed by tokenized assets. The proposed XRPL Lending Protocol is designed to support RWA financing while leaving credit decisions, compliance, and borrower assessments in the hands of financial institutions.
If approved by validators, the protocol would strengthen XRPL’s growing role in institutional tokenization by adding a dedicated credit layer for on-chain finance.
Ripple Targets Institutional Lending on XRPL
The proposed XRPL Lending Protocol aims to solve a key challenge in tokenized finance. While assets such as tokenized U.S. Treasuries, money market funds, commodities, stablecoins, and private credit can already exist onchain, many institutions still lack efficient ways to borrow against them.
Ripple’s proposal separates loan execution from credit evaluation. Financial institutions would continue to perform due diligence, verify borrowers, assess risk, handle legal agreements, and meet regulatory requirements offchain. Once a loan is approved, XRPL will automate the agreed loan terms.
The blockchain would manage:
- Loan origination
- Interest calculations
- Repayment schedules
- Loan maturity
- Default processing
This approach allows institutions to maintain full control over underwriting while using XRPL to streamline loan administration.
Validator Vote Will Decide the Next Step
The proposal depends on approval from XRP Ledger validators before it can become part of the main network.
The system is built around two proposed standards. XLS-65 introduces Single Asset Vaults that pool liquidity around one tokenized asset. XLS-66 defines the lending framework that allows loans to be issued using funds from those vaults.
Unlike many decentralized lending platforms, the first version does not rely on automated collateral management or liquidation mechanisms.
Instead, it focuses on:
- Fixed-term loans
- Institution-led underwriting
- Permissioned participation where required
- Offchain risk management
- First-loss capital structures that protect senior liquidity providers
This proposes better suited for traditional financial institutions looking to enter tokenized credit markets.
Ripple Builds on XRPL’s Growing RWA Presence
The lending proposal comes as XRPL continues to expand its position in the real-world asset sector.
Recently, XRP Ledger recorded approximately $1.9 billion in 90-day RWA inflows, highlighting growing institutional interest in the network for tokenized financial products.
Ripple has also continued improving the ledger’s infrastructure. A recent upgrade addressed issues involving vaults, lending logic, and related features, helping prepare the network for more advanced institutional applications.
These improvements create the foundation needed for larger financial institutions to adopt tokenized lending solutions.
New Financing Options for Tokenized Assets
Ripple believes the protocol could benefit several types of institutional users.
Payment providers could use short-term financing to bridge settlement delays without selling their tokenized holdings. Market makers could access liquidity to finance trading inventories, while corporate treasury teams could earn returns by placing idle assets into professionally managed lending facilities.
The proposal also supports Ripple’s broader strategy of connecting tokenized assets with traditional financial infrastructure.
Earlier this year, Ripple joined Ondo Finance, Mastercard, and Kinexys by J.P. Morgan in a pilot that linked tokenized U.S. Treasury redemptions on XRPL with bank settlement systems. The lending protocol would extend those capabilities by giving institutions a standardized way to access financing using tokenized assets.
Developers can already test the protocol on XRPL’s devnet while the validator voting process continues. If the proposed amendments receive approval, the XRPL Lending Protocol could become another major building block in Ripple’s effort to support institutional finance on blockchain technology.
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Disclaimer:
The information provided in this article is for general informational purposes only. While every effort has been made to ensure accuracy, no guarantees are made regarding the completeness or reliability of the information. Readers should verify facts independently and make their own decisions based on their individual circumstances.
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