Ripple’s Native Lending Protocol Set to Revolutionize XRPL

• RippleX’s Native Lending Protocol could boost XRPL’s DeFi functionality by enabling direct asset borrowing and lending..
• The protocol aims to improve financial inclusivity and transparency on XRPL.
• Integration with the native DEX could boost XRPL’s appeal to developers and users in the crypto space.

RippleX developers Aanchal Malhotra and Vito Tumas have come up with a proposal to introduce a Native Lending Protocol on the XRP Ledger (XRPL) which would enhance the ledger’s decentralized finance (DeFi) features. This initiative is created to enable direct borrowing and lending of digital assets on XRPL, strengthening the whole ecosystem. This improvement was brought to the spotlight in an announcement by RippleX on their platform, X.

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The lending protocol promises improved financial inclusivity, efficiency, and transparency by reducing the reliance on intermediaries. With its modular structure, the proposal underscores adaptability and potential reuse across different applications, marking a substantial stride toward more streamlined financial operations.

Key Features of the Lending Protocol

The proposal encompasses three main specifications: XLS-64d, XLS-65d, and XLS-66d, each contributing to the functionality of the lending framework. XLS-64d introduces the concept of a Pseudo-Account, which simplifies the management of multiple ledger entries and token issuance. Following this, XLS-65d focuses on establishing a ‘Pool’ ledger entry for managing single tokenized asset pools.

Building further on these foundations, XLS-66d enhances the lending processes by integrating off-chain underwriting with on-chain agreements, thereby streamlining loan management. This specification also allows liquidity providers to deposit tokens such as XRP, wBTC, and wETH into lending pools to generate interest.

The protocol enables Pool Delegates to oversee Lending Pools, attract capital, and coordinate loans. Borrowers can negotiate loan terms off-chain with Pool Delegates and finalize these terms on-chain. It also introduces fixed-term loans with predetermined interest rates, thus negating the need for collateral through strategic risk management practices. Additionally, Pool Delegates contribute first-loss capital to protect Liquidity Providers from potential defaults.

David Schwartz, Ripple’s Chief Technology Officer, explained his excitement about the proposal, noting its potential to enrich the XRP ecosystem. The integration between native DEX and lenders was also emphasized by Schwartz, which are intended to make the financial services more transparent.

This proposal, if adopted, could usher in a new era for XRPL, enhancing its utility and attractiveness to both developers and users in the crypto community.

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