XRPL Proposes Closed-Ended Vaults and Cash-Basis Accounting in Lending Protocol

The XRP Ledger (XRPL) is proposing changes to its lending protocol, which could significantly impact how loans are structured and interest is accounted for. The proposed amendment, known as LendingProtocolV1_1, would introduce closed-ended vaults, where assets can only enter during a subscription window, and cash-basis accounting, where interest income counts only when a borrower makes a payment.

Currently, open-ended vaults allow users to enter and exit at any time, which can affect how gains are distributed among participants. With closed-ended vaults, the subscription window fixes membership, limiting new shares from being minted during investment or redemption stages.

The amendment record describes LendingProtocolV1_1 as an extension of the LendingProtocol and SingleAssetVault amendments. If enabled, it would also limit the creation of new loan brokers to closed-ended vaults, tying new lending activity to the updated structure.