According to U.Today, a new on-chain lending protocol has been introduced on the XRP Ledger by Aanchal Malhotra and Vito Tumas. This mechanism will allow on-chain accounts on the XRP Ledger to benefit from decentralized lending without the need for intermediaries. The proposal, known as XLS-66d or 'XRP Ledger-Native Lending Protocol,' was published on RippleX devs' GitHub on April 12, 2024. It aims to provide the XRP Ledger blockchain with the ability to host on-chain lending/borrowing pools.
The protocol is expected to enable XRPL users to borrow and lend digital assets directly, promoting financial inclusion, transparency, and efficiency, and eliminating the role of intermediaries. The activation of XLS-66 requires the implementation of two new entities within XRPL, namely 'Pseudo-Account' and 'Single-Asset Tokenized Pool.' The key features of potential XRPL lending/borrowing protocols are similar to those of top existing DeFis. Users will be able to deposit fungible tokens such as XRP, wBTC, wETH, and others into a lending pool to earn interest. Pool delegates, a new type of on-chain actor, will manage the operations of lending pools, attract liquidity, and provide loans.
The new design is completely decentralized. Borrowers and pool delegates will agree on loan terms off-chain, then record them on-chain. A 'loan' will be a new ledger object responsible for loan financing and withdrawing, payments, and interest rates specifications. Ripple's technical development arm, RippleX, emphasized the significant importance of this development for the XRP Ledger and the DeFi scene as a whole. The Lending Protocol enables fixed-term loans with pre-set terms for interest-accruing loans. It eliminates the need for collateral by using off-chain underwriting, risk management, and a first-loss capital protection scheme in case of default. For developers, the protocol's modular design and extensibility make it easy to build and integrate lending dApps on the XRPL, unlocking a wide range of use cases.
The implementation of native on-chain lending for XRPL is expected to boost its real-world assets segment. The protocol could potentially open up creative possibilities to tokenize real-world assets and lend them in any desired currency. As reported by U.Today, last week, XRPL enhanced its AMM design with a major amendment.