Ripple is building a new on-chain lending protocol on the XRP Ledger (XRPL) aimed at institutional borrowers, according to a CoinDesk report. The XRPL Lending Protocol will allow regulated entities to borrow against their digital assets held on the ledger, moving beyond simple token issuance and transfer.
The protocol is architected to split responsibilities: the blockchain handles fund pooling, interest calculations, repayments, and defaults via smart contracts, while off-chain financial institutions retain control over credit assessment, loan approval, and term setting. Two core components are designed: a Single Asset Vault to create liquidity pools from a single asset type, and a Lending Layer that allocates those pooled funds as loans under predefined conditions.
This initiative positions Ripple to compete in institutional DeFi by unlocking liquidity without forcing asset sales. The automated backend reduces operational costs for lenders, while compliance is maintained through traditional borrower checks. The announcement comes as Ripple expands beyond cross-border payments, signaling a broader ambition to support complex financial products. Although regulatory clarity for digital asset lending remains fragmented globally, the hybrid model—on-chain servicing with off-chain credit evaluation—may appeal to institutions navigating compliance frameworks.
