Ripple wants institutions to borrow against tokenized assets on XRPL
Key takeaways
- The proposed XRPL Lending Protocol, a copy of which was shared with CoinDesk, is built on a simple split.
- Its pitch is that a blockchain is good at enforcing rules consistently but cannot judge creditworthiness or navigate the rules that differ by jurisdiction, so that judgment should stay with the people who do it now.
- A Single Asset Vault pools a single asset, and the lending layer turns that pooled money into loans with set terms.
The proposed XRPL Lending Protocol, a copy of which was shared with CoinDesk, is built on a simple split. The blockchain handles the mechanics of a loan once it is agreed, how money is pooled, how interest adds up, how repayment is enforced and how a default is processed, while the actual credit decision, whether a borrower is good for the money and on what terms, stays with the lending institution off the blockchain.
Its pitch is that a blockchain is good at enforcing rules consistently but cannot judge creditworthiness or navigate the rules that differ by jurisdiction, so that judgment should stay with the people who do it now.
The protocol has two parts. A Single Asset Vault pools a single asset, and the lending layer turns that pooled money into loans with set terms. Both are still proposals, defined in technical drafts known as XLS-65 and XLS-66, and remain subject to approval by the validators who run the network. The features are available to test on a development network but are not live.