Ripple has published the specifications for an XRPL Lending Protocol, comprised of two new standards: XLS-65 (Single Asset Vaults) and XLS-66 (Lending Protocol). The amendments are pending validator approval on the XRP Ledger. The protocol is designed to deliver standardized onchain credit infrastructure that mirrors how traditional capital markets separate custody and issuance from financing activity.
How the Protocol Works
The XRPL Lending Protocol splits credit activity into two distinct layers. The onchain layer handles execution: liquidity pooling via single-asset vaults, loan origination, interest accrual, repayment processing, and default handling — all governed by smart contract-like amendments to the XRPL. The offchain layer retains credit judgment and underwriting with institutions, preserving existing risk frameworks while standardizing execution.
Single Asset Vaults (XLS-65) allow liquidity providers to deposit a single asset type — including RLUSD, XRP, or other XRPL-native tokens — into a pooled vault that earns yield through lending activity. The Lending Protocol (XLS-66) governs how those vaults interact with borrowers: loan terms, collateral requirements, interest rate models, and liquidation mechanics are defined at the protocol level rather than requiring custom implementation per counterparty.
Use Cases
Ripple has outlined three primary institutional use cases for the lending protocol:
- Short-term liquidity: Institutions holding tokenized assets can access working capital without liquidating positions, using their holdings as collateral for short-duration loans.
- Inventory financing: Market makers and payment processors can finance their XRP or RLUSD inventory positions against receivables, reducing the capital cost of maintaining liquidity buffers.
- Structured credit: The vault architecture supports more complex credit structures where multiple asset types or tranched risk profiles are required.
Why This Matters for XRPL
DeFi lending has existed on Ethereum and other chains for years, but XRPL has historically lacked native credit infrastructure. The lending protocol addresses this gap while deliberately staying within XRPL's design principles: no general-purpose smart contracts, no unbounded state, and compliance-compatible by design (offchain underwriting, institutional counterparties).
If adopted by XRPL validators, the protocol would add a foundational credit layer to an ecosystem that already handles $1B+ in daily payment volume. It also creates a productive use for RLUSD reserves — currently yielding nothing in custody — and for tokenized real-world assets settling on XRPL.
Source: Ripple Insights — "The XRPL Lending Protocol: Bringing Credit Infrastructure Onchain" (June 29, 2026)