Ripple will launch a local lending protocol, XRP users can earn income directly on XRPL

With Ripple recently proposing a native lending protocol, there are more and more ways for XRP holders to earn money on the XRP Ledger (XRPL).

Last Friday, RippleX head of research Aanchal Malhotra and Ripple software engineer Vytautas Vito Tumas jointly proposed an XRPL native lending protocol, the specification of which is called “XLS-66d”.

The announcement comes after The Crypto Basic first revealed four weeks ago that it was working on introducing an XRPL native lending protocol.

It is worth noting that this proposal aims to expand the DeFi capabilities of XRPL and provide users with more opportunities to make money. It will enable peer-to-peer lending of crypto assets without the need for intermediaries.

Additionally, the agreement will provide for term loans with pooled funds and a preset interest rate. It avoids the need for collateral and instead relies on off-chain underwriting and risk management.

Notably, liquidity providers deposit XRP or other tokens into lending pools to earn interest, while borrowers negotiate loan terms with delegators who manage the lending pools. The protocol supports term loan lending pools from multiple lenders to a single borrower.

XRPL lending protocol specifications

RippleX developers emphasized flexibility and reusability when designing this proposed XRPL-native lending protocol. First, they point out that flexibility is ensured by designing the protocol to be upgradeable. Additionally, reuse is enabled across multiple future protocols by introducing usable objects.

RippleX developers introduced three specifications for the proposed lending protocol to meet these characteristics: XLS-64d, XLS-65d, and XLS-66d.

First, the XLS-64d specification allows a single pseudo-account to be associated with multiple ledger items in order to track balances and issue tokens.

The XLS-65d specification, or “Single Asset Tokenized Pool,” introduces a new pool ledger item that represents a single pool of tokenized assets. This facilitates interactions with minimal, scalable ledger items and flexible transactions.

At the same time, the XLS-66d introduced the actual lending protocol. It utilizes XLS-65d to manage the assets of liquidity providers.

Ripple’s CTO responds

Ripple’s CTO David Schwartz expressed enthusiasm for the proposed XRP Ledger native lending protocol. He stressed that the protocol brings entirely new uses to XRPL and said its adoption could significantly boost the ecosystem.

Notably, this proposal comes hot on the heels of XRPL’s implementation of an automated market maker (AMM) feature that allows XRP holders to provide liquidity and passively earn yield.

Following a revision two days ago, enthusiasts have committed more than 820,000 XRP tokens to the liquidity pool. However, the latest data shows that there are now more than 1,800,000 XRP locked in liquidity pools.

Disclaimer: This content is for informational purposes only and should not be considered financial advice. The opinions expressed in this article may contain the personal opinions of the author and do not necessarily reflect the views of The Crypto Basic. Readers are encouraged to conduct thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.