The LendingProtocolV1_1 amendment for the XRP Ledger (XRPL) has received 22 out of 35 possible validator votes, representing 62.86% support among the network’s validators.
Amendment Progress and Supporters
Over the last three weeks, three additional validators endorsed the proposal. Ripple, the blockchain company known for developing and maintaining XRP and its ecosystem, has had its own nodes support the initiative from the outset. Academic institutions, including the University of Waterloo and the University of California, Berkeley, have also voted in favor.
For the LendingProtocolV1_1 amendment to become active, the proposal needs to secure at least 80% of the votes, or 29 out of 35, and maintain that level for two consecutive weeks.
A related proposal, the SingleAssetVault amendment (XLS-65), currently has the backing of 23 validators, which constitutes 65.7%, and requires the approval of six more to meet the activation threshold.
Main Features of the Amendments
The XLS-65 and XLS-66 standards aim to replace the traditional overcollateralization and instant liquidation mechanisms with a system that enables companies to obtain fixed-term, uncollateralized loans directly on XRPL. These loans are structured similarly to conventional bank credit, offering a fixed term and pre-arranged interest rate.
Mini dictionary: XLS-65 and XLS-66, proposed standards on XRPL, introduce lending features such as Single Asset Vaults and fixed-term uncollateralized loans, streamlining on-chain lending processes for institutional participants.
Ripple previously tested the protocol on a private XRPL network configured with nine nodes, each matching the specifications of the mainnet infrastructure.
How the Protocol Works
With the new protocol, users can deposit XRP or stablecoins like RLUSD into Single Asset Vaults, receiving shares that represent their stake. Interest payments occur only after borrowers repay the principal to the vault, and withdrawals are managed on a first-come, first-served basis.
Borrowers undergo off-chain vetting by Loan Brokers, responsible for assessing creditworthiness and recording each loan disbursement on the ledger. According to the XRPL documentation, the protocol uses off-chain processes for underwriting and risk assessment.
Depositors receive interest payments after the borrower has repaid what is owed, and withdrawals from the vault occur in the order requests are made.
To cover potential losses, Loan Brokers contribute their own first-loss capital, which is used as an initial buffer if a client defaults. Should the broker’s capital prove insufficient, losses are then transferred to depositors, reducing the value of their shares.
Vault issuers can freeze or reclaim assets in certain situations. Ripple noted that when a vault is frozen, all associated lending protocol operations are immediately halted until the freeze is lifted.
Potential Impact on XRP Holders
Previously, XRP holders seeking passive income options had to rely on third-party bridges or wrapped tokens. The activation of LendingProtocolV1_1 would enable them to deposit XRP directly into XRPL-based pools, thanks to low transaction costs, and share in the interest payments from borrowers. The income generated depends on both the loan terms set by the loan broker and the actual receipt of repayments.
If a major borrower fails to repay and the broker’s safeguard capital is depleted, depositors assume the remaining losses, potentially leading to a drop in the value of their holdings within the vault.
| Amendment | Current Votes | % Support | Votes Needed for Activation |
|---|---|---|---|
| LendingProtocolV1_1 | 22 | 62.86% | 7 |
| SingleAssetVault (XLS-65) | 23 | 65.7% | 6 |
