XRP Ledger Lending Nears Reality with LendingProtocolV1_1 Validator Voting
The XRP Ledger (XRPL) is moving closer to native lending after LendingProtocolV1_1 opened for validator voting. This milestone is a significant step towards implementing a lending framework that supports fixed-term, uncollateralized loans using pooled funds from Single Asset Vaults.
LendingProtocolV1_1 introduces closed-ended vaults and cash-basis accounting for XRPL lending. Closed-ended vaults have three defined phases: subscription, investment, and redemption. This structure makes returns easier to account for because all vault participants enter before the investment period begins.
The upgrade also changes how interest is counted by recognizing it only as income after the borrower actually pays it, rather than scheduled future payments.
XRPL lending uses off-chain underwriting, with loan brokers handling credit assessment and underwriting. The protocol relies on this process rather than automated onchain collateral liquidation.