Key Highlights
- XRPL has opened LendingProtocolV1_1 for validator voting, bringing the network closer to launching native lending.
- The amendment introduces closed-ended vaults with subscription, investment, and redemption stages, while restricting lending to these vaults.
- LendingProtocolV1_1 changes interest accounting so interest is recorded only when borrowers actually make payments.
The XRP Ledger is taking another step toward bringing lending directly to its network as RippleX opens the LendingProtocolV1_1 amendment for validator voting.
The upgrade adds closed-ended vaults and a new method of recording interest, and it must activate with two other amendments before XRPL lending can go live on mainnet.
The latest move follows earlier work on XLS-65 and XLS-66, which introduced the idea of Single Asset Vaults and a lending system for fixed-term loans. The LendingProtocolV1_1 amendment now adds rules governing how those vaults should work when they are used for lending. RippleX said the amendment is open for validators to review and vote on.
XRPL separates flexible vaults from lending-ready vaults
At the heart of the update are two types of vaults: open-ended and closed-ended.
According to a post shared by RippleX, open-ended vaults allow users to put assets in or take them out at any time. They can still be used for things such as shared funds or pooled custody. However, they cannot be used to create new loan brokers under the new lending rules.
Closed-ended vaults work differently. They have a fixed life with three clear stages: subscription, investment, and redemption.
Three stages decide when money can move
During the subscription stage, users can deposit assets into the vault and receive shares. Once this period ends, the vault moves into the investment stage. New deposits are no longer accepted, allowing the vault owner to use the pooled funds for loans.
The final stage is redemption. Once the set redemption date arrives, users can withdraw their share of the vault based on its final value. This value can include both the original money and the interest earned from the loans.
The fixed structure is designed to prevent people from entering or leaving the vault at different stages to benefit from changes in its value. Since new shares cannot be created during the investment period, users cannot simply join after loans have already started earning returns.
XRPL changes when loan interest becomes income
The amendment also changes how interest is counted.
Under the earlier lending design, the expected interest from a loan could be recorded as income when the loan was created. LendingProtocolV1_1 changes this to a cash-basis system. This means interest is counted only when the borrower actually pays it.
For example, if a loan is expected to generate interest over several months, that future interest will not immediately be treated as money already earned by the vault. It becomes income when the payment is received. This means the vault’s total assets show money that has actually come in rather than money that is only expected later.
The lending system is designed around fixed-term loans funded through pooled assets. Borrower checks and credit decisions would happen outside the XRP Ledger, while key parts of the loan, including its creation, repayments, and defaults, would be recorded on-chain.
Three amendments stand between proposal and live lending
For lending to become active on XRPL, three amendments must work together: LendingProtocolV1_1, LendingProtocol, and SingleAssetVault.
LendingProtocol provides the core lending functions, including loan creation, repayment, and default handling, while SingleAssetVault provides the vault structure.
The current validator vote is therefore part of the broader lending rollout. The proposal is not yet live on mainnet. Validators must approve the required amendments through XRPL’s voting process before the native lending system can become active.
The development also follows the release of xrpld 3.4.1 on September 25, which came after version 3.4.0 introduced LendingProtocolV1_1 alongside other protocol changes.
With the latest vote open, XRPL is moving from introducing the lending framework to asking validators to decide whether the new rules should become part of the network.
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