XRP Ledger Votes on Lending Upgrade with Closed-Ended Vaults
The XRP Ledger is voting on a new lending upgrade that introduces closed-ended vaults and changes how interest is counted. The LendingProtocolV1_1 amendment, if approved, will add flexibility to lending structures by allowing lenders to operate within defined investment and redemption periods.
Closed-ended vaults have three stages: subscription, investment, and redemption. Once a vault closes its subscription window, new shares cannot be issued, giving lenders a defined timetable for their investments.
The amendment also changes the treatment of interest, shifting recognition from origination to actual payment. This means that interest will only be counted as income when the borrower makes a payment, rather than being recognized immediately upon loan origination.
The proposed change is not adding collateral or automatic liquidation, but rather focusing on fixed-term, uncollateralized credit origination. Loan brokers can provide first-loss capital to cover missed payments, and if available cover falls below the required minimum, they cannot issue new loans or collect fees.