The XRP Ledger (XRPL) is inching closer to a major decentralized finance (DeFi) upgrade that could unlock new lending opportunities and liquidity for the network. Vet (@Vet_X0), a prominent XRPL validator and community member, reported that the Lending Protocol amendment has secured two additional Yes votes, bringing it closer to activation. Currently, 21 out of 35 trusted validators (60%) have voted in favor, with eight more Yes votes needed to reach the required threshold of 29 validators.
The Lending Protocol amendment, known as XLS-66, aims to introduce a native lending feature to the XRP Ledger. Unlike traditional crypto lending services that require borrowers to provide excessive collateral, XLS-66 enables fixed-term and non-collateralized lending. This innovation allows qualified borrowers to secure loans without overcollateralizing with cryptocurrency.
According to the official XLS-66 document, the Lending Protocol will facilitate the pooling of funds through Single Asset Vaults, which can then be loaned to borrowers under predefined terms. The system involves three key participants: depositors, loan brokers, and borrowers. Depositors contribute assets to the vaults, loan brokers facilitate lending deals and evaluate borrowers, and borrowers receive and repay loans based on agreed schedules.
The upgrade could empower financial institutions and other entities to utilize capital more effectively on the XRP Ledger, moving beyond mere asset holding or transfers. It may also create new opportunities for earning interest on deposited assets in lending vaults, though the interest rates will depend on lending activity and associated risks. The latest validator data shows that the amendment has reached 23 out of 35 votes, needing six more to hit the threshold. Additionally, the LendingProtocolV1_1 amendment, which includes upgrades like closed-ended vaults and updated interest accounting, currently has 21 Yes votes. All three amendments are under consideration, with none yet achieving supermajority.