According to U.Today, Aanchal Malhotra and Vito Tumas introduced an on-chain lending protocol for XRP Ledger, which will enable on-chain accounts on XRP Ledger to benefit from decentralized lending in a non-censorship-resistant manner without the need for middlemen. The new proposal, named XLS-66d or "XRP Ledger-Native Lending Protocol", was published on RippleX developers' GitHub on April 12, 2024. It aims to provide the XRP Ledger blockchain with the opportunity to host on-chain lending/borrowing pools.
The proposal is expected to enable XRPL users to directly lend and borrow digital assets, promote financial inclusion, transparency and efficiency, and eliminate the role of intermediaries. Technically, the activation of XLS-66 requires the implementation of two new entities in XRPL, namely "pseudo accounts" and "single asset tokenization pools."
This new design is 100% decentralized: borrowers and pool representatives will agree on loan terms off-chain, which will then be recorded on-chain. A "loan" will be a completely new ledger object. It will be responsible for loan funding and withdrawals, payments, and interest rate provisions. The team at RippleX, Ripple's technology development arm, emphasized the importance of this achievement for the XRP Ledger and the entire DeFi scene: The lending protocol enables fixed-term loans with preset interest-accumulating loan terms. It bypasses the need for collateral by using off-chain underwriting, risk management, and first-loss capital protection schemes in the event of default.
