Ripple announced Monday that developers can now test the XRPL Lending Protocol in a testing environment, moving the XRP Ledger closer to native on-chain borrowing and lending for institutions.
The proposal relies on technical specifications XLS-65 and XLS-66 to introduce credit infrastructure directly to the network. If validators approve the upgrade, it would allow tokenized real-world assets, such as money market funds and commodities, to function as working capital rather than remaining idle.
The protocol consists of two core components: a Single Asset Vault for pooling assets and a Lending Protocol dictating loan terms and repayment logic. Crucially, underwriting remains off-chain, allowing institutions to retain strict control over creditworthiness assessments.
Ripple stated that once a loan is originated, repayment schedules and default conditions operate under predefined rules. Loss compartments are structured to put capital from pool managers and underwriters at risk first, mirroring traditional finance safety nets.
The firm argues that crypto-native platforms have proven on-chain lending scale, but their governance models do not satisfy Wall Street’s risk management procedures. The upgrade aims to be the 'missing layer' for on-chain finance, following a recent milestone where Ondo Finance executed tokenized U.S. Treasury redemptions on the XRPL.