XRP Ledger’s ‘Missing Layer’ Draws Closer as Developers Test Lending, Credit Features: Ripple

XRP’s native blockchain inched closer on Monday toward functionality allowing institutions to borrow and lend digital assets directly on-chain, with Ripple announcing that developers can start experimenting with the XRPL Lending Protocol within a testing environment.

In a blog post, the firm outlined how two technical specifications dubbed XLS-65 and XLS-66 would introduce native credit infrastructure directly to the XRP Ledger (XRPL), providing financial firms with a novel way to structure agreements on-chain.

If approved by network validators, then the dual upgrade will enable tokenized real-world assets (RWAs)—such as money market funds and commodities—to be deployed as working capital on XRPL, as opposed to sitting as static inventory across millions of network accounts.

According to the announcement, the XRPL Lending Protocol relies on two components. The “Single Asset Vault” provides a standardized format for pooling assets on XRPL, while the “Lending Protocol” helps dictate loan terms, servicing elements, and repayment logic.

Under the arrangement, Ripple noted that underwriting stays off-chain. That means the process lenders use to determine a borrower’s creditworthiness isn’t reflected on XRPL, a design intended to let institutions retain control over lending decisions.

“This separation mirrors real financial infrastructure,” Ripple said. “By preserving that distinction, XRPL can support a wider range of credit structures over time, rather than hard-coding one lending model into a single application.”

Still, repayment schedules, interest calculations, and default conditions operate under predefined rules once a loan is originated, Ripple said. On top of that, losses from defaults are designed to be compartmentalized using a multi-tiered approach where capital from pool managers and underwriters is put at risk first, mirroring structures in traditional finance.

Ripple referenced public lending protocols such as Aave. Although they’ve shown that lending can operate on-chain at scale, the firm argued that their crypto-native governance models and risk frameworks don’t align with Wall Street’s risk management procedures.

The company listed several examples of what the dual upgrade would enable, including the ability for a payment provider to access short-duration liquidity and a way for treasury teams to generate revenue by lending digital assets under clearer terms.

The lending protocol follows a major milestone for the network in May, when Ondo Finance used the XRPL to execute the first cross-border, cross-bank redemption of tokenized U.S. Treasuries. However, Ripple described this new dual lending upgrade as on-chain finance’s true “missing layer,” arguing that moving an asset on-chain is only half the battle.

The XRPL Lending Protocol would likely bolster the use of Ripple’s stablecoin on-chain. Since its debut in late 2024, RLUSD has grown to a market cap of $1.5 billion, according to CoinGecko.

On Monday, XRP changed hands around $1.05, an 8.2% decrease over the past week. Last Thursday, the cryptocurrency fell to its lowest point since President Donald Trump’s reelection, tumbling one cent shy of a dollar in sympathy with Bitcoin.