XRP may soon serve a more prominent role in institutional lending if upcoming credit models on the XRP Ledger adopt the token as collateral for stablecoin-backed loans.
RippleX Sees XRP Collateral as a Key Use Case
Jazzi Cooper, Head of Product at RippleX, identified “XRP as collateral for institutional credit” as a major potential application. Cooper made the remarks in an exchange on the X platform, emphasizing that the XRP Ledger’s developing XLS-65 and XLS-66 lending architecture could enable this use case.
The discussion followed inquiries about whether market makers and institutional traders could tap into credit lines using XRP as backing.
However, Cooper clarified that current institutional borrowing of this kind has not yet begun through XLS-65 and XLS-66 on mainnet. Both proposals remain under development and are still advancing through the XRP Ledger’s governance and technical review processes.
Cooper has highlighted that there is “growing interest in a dual pool model, with an XRP pool for collateral and a separate pool for RLUSD as the loan asset.”
Under such a structure, institutions could pledge XRP as collateral and borrow dollar-denominated liquidity—such as RLUSD—without liquidating their XRP holdings.
This mirrors concepts from traditional finance, where an organization is able to access liquidity by pledging assets held on its balance sheet.
The proposal aligns with Ripple’s broader strategy to position XRP as institutional collateral. Ripple, a San Francisco-based technology company specializing in enterprise blockchain solutions, aims to bring the digital asset closer to use cases in margin, settlement, and secured financing for institutional players.
Additionally, the discussion adds a unique XRP-oriented dimension to third-party credit markets, such as those being developed by Clearpool and Cicada, which focus on RLUSD lending and the XRP Ledger’s native credit features.
Mini dictionary: RLUSD, a proposed US dollar-pegged stablecoin intended to facilitate lending and liquidity on the XRP Ledger, is designed for institutional credit markets and infrastructure on XRPL.
XRPL Lending Protocol Faces Developmental Hurdles
The formal XRPL Lending Protocol currently focuses on fixed-term, uncollateralized loans funded via Single Asset Vaults. In its present form, the protocol performs borrower risk checks and credit assessments off-chain, while all loan origination and servicing are recorded on the XRP Ledger.
Automated collateral management and onchain liquidation features—common in decentralized lending protocols like Aave—are not yet available within the current XRPL lending framework.
To enable a credit product backed by XRP, further structuring would be required around XLS-65 vaults, potentially involving loan brokers and institution-specific risk management, as opposed to simply deploying pre-built liquidation mechanisms.
The next upgrades for XRPL’s lending functions, collectively referred to as LendingProtocolV1_1, include a shift toward closed-ended vaults and updates to accounting practices, but have yet to receive final validator approval for mainnet activation.
Until validators approve the underlying XLS-65 and XLS-66 amendments, the governance process will remain a central challenge to rolling out these lending products on XRPL.
Cooper’s recent comments serve as a signal that XRP’s future could include a productive institutional role, transforming it from merely a speculative holding or payment asset into collateral that supports real-world borrowing needs.
