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Ripple Looks to Add Onchain Lending to XRP Ledger

Ripple is testing a lending layer on the XRP Ledger for institutional loans backed by onchain assets, with RLUSD as a possible form of collateral. The proposal still has to go through validators and would compete with DeFi protocols like Aave and Compound.

By Mike Hesp
• 2 min read
Ripple Looks to Add Onchain Lending to XRP Ledger

Key Takeaways

  • Ripple is building a lending layer for the XRP Ledger that would let institutions borrow against assets they already hold onchain.
  • The XRPL Lending Protocol is made up of XLS-65 and XLS-66, and it is not live yet. Validators still need to approve it.
  • Ripple is targeting institutional lending with off-chain credit checks and fixed terms as an alternative to DeFi protocols.

Ripple is developing a lending layer for the XRP Ledger that would allow institutions to borrow against assets they already keep onchain. The goal is to let the blockchain handle the parts it can automate: enforcing rules, accruing interest, processing repayments, and managing defaults. Credit decisions, however, would still be made off-chain by the lender.

How the Protocol Works

The proposal is called the XRPL Lending Protocol, and the technical drafts are split into XLS-65 and XLS-66. It has two main pieces: a Single Asset Vault that pools one asset, and a lending layer that turns that pool into fixed-term loans. The features can already be tested on a development network, but they are not live yet and still need approval from the validators that secure the network.

Ripple is clearly aiming this at institutional users. For instance, a holder of RLUSD reserves, Ripple's dollar-pegged stablecoin, could unlock liquidity against expected settlement flows instead of tapping a bank credit line or selling assets. In that setup, the blockchain would keep execution consistent and predictable, while humans would still decide whether a borrower qualifies and on what terms. That fits with RLUSD's broader rollout, including its recent launch in Japan after regulatory approval.

Competition With DeFi

Ripple is entering a space where onchain lending is already well established through protocols like Aave, Compound, Maple, and Clearpool. The difference is that those platforms are mostly built around crypto-native governance and usually rely on overcollateralized loans. Ripple is trying to take a more traditional lending approach, with off-chain credit analysis plus fixed maturities and rates.

The company is essentially trying to connect public blockchain infrastructure with the needs of institutional finance. Ripple says that matters because credit rules vary by jurisdiction, and a protocol cannot make that call on its own. By putting the lending mechanics at the network level, the system should be less exposed to changes in lender behavior.

Why This Matters

For European crypto readers, this is notable because it shows how blockchain networks are increasingly being shaped around institutional use cases, not just token transfers. If a public chain like XRP Ledger adds lending at the protocol level, it could point to where crypto infrastructure is heading: more emphasis on compliance, predictability, and compatibility with existing financial workflows. Even so, the proposals still need validator approval before they can be used broadly.

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