XRPL Lending Protocol Targets Institutional-Grade XRP Yield

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• XRP holders can earn yield with the XRPL Lending protocol and also meet institutional requirements for crypto lending.
• Each loan will have a dedicated Single Asset Vault, which will hold only XRP or RLUSD. 

Ripple engineer Edward Hennis has shared new details on the forthcoming XRP Ledger (XRPL) lending protocol, outlining how it is designed to deliver institutional-grade yield opportunities for XRP holders as Ripple works to expand institutional adoption on the network.

In a post on X, Hennis said the XRPL Lending Protocol will enable productive, on-ledger lending tailored for institutions, while creating a structured pathway for XRP holders to earn yield. He called the system a protocol-native framework built around fixed-term, fixed-rate, and underwritten credit. This marks a shift from existing crypto lending models.

XRP Ledger (XRPL) Lending Protocol and Yield

As per Hennis, traditional crypto lending typically relies on pooled collateral and variable interest rates. However, many institutions find that these features are unsuitable. However, the XRPL model solves this concern by assigning each loan to a dedicated Single Asset Vault (SAV).

Each vault will hold only one asset, i.e. XRP or Ripple’s native RLUSD stablecoin. Thus, it isolates risk to a specific credit facility rather than spreading it across a shared pool. A pool administrator acts as the underwriter and operator, while third-party providers can build user interfaces on top of the system.

Hennis also outlined several potential use cases for the protocol. For e.g. market makers can borrow XRP or RLUSD for inventory management and other arbitrage strategies. Also, payment service providers could borrow RLUSD to pre-fund instant merchant payouts, and fintech lenders could access short-duration working capital through the network.

For XRP holders, the protocol offers an alternative to holding idle tokens. This allows them to lend into institutional credit facilities and earn yield backed by underwritten loans. Hennis added that the protocol’s enabling amendments will enter validator voting in late January. He said that this move will help in activating protocol-native credit markets on the XRP Ledger.

A Major Liquidity Boost to The Ledger

Vet, an XRPL validator, commented on the upcoming Lending protocol, calling it a major liquidity boost for the network. This could have greater implications for the retail as well as institutional participants. Vet called the lending protocol as a “liquidity pump,” saying it is designed to unlock more advanced decentralized finance use cases on the XRP Ledger.

According to Vet, the system will support key strategies such as cross-border corridor funding, payout liquidity smoothing, and inventory financing. This will be particularly useful for large-scale financial transactions.

Vet added that the protocol represents a “huge liquidity unlock,” stressing its importance for institutions such as digital asset treasuries as well as payment service providers that require predictable and efficient access to capital. He also noted that retail users are expected to be able to participate in the protocol, with limitations applying only to assets that carry specific holder restrictions.