The XRP Ledger (XRPL) is reviewing a lending standard that could allow pooled assets to fund fixed-term loans directly on the ledger. The draft specification, known as XLS-66, would build on XLS-65 Single Asset Vaults, through which depositors place assets into shared pools and receive shares representing their stake in each one. The proposal is part of a broader push toward native DeFi on the ledger, which activated its Automated Market Maker (AMM) amendment, XLS-30, in 2024.

Under the proposal, a loan broker would create and manage each lending pool, approve loans, set fees, and define first-loss capital requirements. Credit checks and borrower assessment would remain off-chain rather than relying on automatic collateral liquidations. Brokers could post first-loss capital to reduce depositor losses if borrowers default. The structure could support XRP, issuer-backed assets, or Multi-Purpose Tokens, and access to a pool could remain public or restricted.

Vaults Would Hold Pooled Lending Assets

Under XLS-65, depositors would place a single asset into a vault and receive shares based on their contribution. Those shares would demonstrate ownership, but they would not guarantee immediate access to cash once the pool begins funding loans.

Each pool would require its own withdrawal rules. Pool terms could specify whether withdrawal requests enter a queue, whether lending limits apply, and how much liquid capital remains available while loans stay open.

Loan Terms Tracked On-Ledger

XLS-66 would allow a broker and borrower to create a loan with a principal, interest rate, payment schedule, maturity date, and grace period. The loan record would track unpaid principal and interest on the ledger itself.

The system would also support late-interest rules, origination fees, and early repayment charges. If a borrower misses payments beyond the grace period, the broker could mark the loan as impaired or defaulted.

Credit Checks Would Remain Off-Chain

The proposal focuses on uncollateralized lending and does not introduce automatic collateral sales or forced liquidations. Instead, brokers would assess borrowers outside the XRP Ledger using financial records, legal agreements, guarantees, trading history, or other credit checks. That departs from widely used DeFi lending protocols such as Aave and Compound, where borrowers typically overcollateralize loans and smart contracts liquidate collateral automatically when its value falls. XLS-66 instead mirrors the intermediated structure of traditional credit markets, with the broker standing between depositors and borrowers.

This approach assigns brokers a central role in risk control. Depositors would need information on borrower standards, concentration limits, legal terms, and the broker's lending process before allocating assets to a pool.

XLS-66 would also let brokers post first-loss capital to absorb part of a default. The value of that protection would depend on the size of the reserve relative to the pool's outstanding loans.

Draft Status and Dependencies

The proposal remains a draft and depends on both XLS-65 and XLS-64. Because XLS-66 builds directly on the vault design, its progress is tied to XLS-65 clearing the standards process first. XRPL protocol upgrades follow the ledger's amendment process, under which a shipped change activates only after receiving sustained support from validators over a two-week window, so timing depends on validator adoption rather than a fixed release date.

Adoption would require approved standards, active brokers, borrowers, and clear pool terms.

Evernorth has explored XRP-related decentralized finance (DeFi) opportunities, but no primary material reviewed identifies an Evernorth-run lending pool.

Source: Blockonomi