More opportunities are arising for XRP holders to earn on the XRP Ledger (XRPL) as Ripple recently introduced a native Lending Protocol. Aanchal Malhotra, the Head of Research at RippleX, and Ripple’s software engineer Vytautas Vito Tumas jointly proposed an XRPL-native lending protocol known as “XLS – 66d”. This announcement comes after The Crypto Basic previously reported that efforts were underway to introduce an XRPL native lending protocol.
The proposed lending protocol aims to expand the DeFi capabilities of the XRPL, providing users with more earning possibilities. It allows for peer-to-peer borrowing and lending of crypto assets without intermediaries. The protocol also offers fixed-term loans with pooled funds and pre-set interest rates, eliminating the need for collateral by relying on off-chain underwriting and risk management.
In this protocol, liquidity providers deposit XRP or other tokens into a lending pool to earn interest, while borrowers negotiate loan terms with a pool delegate who manages the lending pool. The protocol supports multiple-lender-single-borrower lending pools for fixed-term loans.
The design of the proposed XRPL native Lending Protocol focuses on flexibility and reusability. The developers emphasize the protocol’s upgradeability and introduce usable objects that can be utilized in multiple future protocols. Three specifications are introduced: XLS-64d, XLS-65d, and XLS-66d. The XLS-64d specification allows for the association of a single pseudo-account with multiple ledger entries. The XLS-65d specification introduces a new Pool ledger entry for a single tokenized asset pool, enabling interaction with minimal, extendable ledger entries and flexible transactions. Lastly, the XLS-66d specification introduces the actual lending protocol, leveraging XLS-65d for managing liquidity provider assets.
Ripple’s CTO, David Schwartz, has expressed enthusiasm for the proposed XRP Ledger Native Lending Protocol, highlighting its potential to bring new utility to the XRPL ecosystem. This proposal follows the recent implementation of an automated market maker (AMM) functionality on the XRPL, allowing XRP holders to provide liquidity and earn passive income.
Since the implementation of the AMM functionality, over 820K XRP tokens have been committed to liquidity pools, with over 1.8 million XRP currently locked in liquidity pools.
Please note that this content is for informational purposes only and should not be considered financial advice. The views expressed in this article are the author’s personal opinions and do not reflect the opinion of The Crypto Basic. Readers are advised to conduct their own research before making any investment decisions. The Crypto Basic is not liable for any financial losses incurred.