The XRP Ledger network is set to make a pivotal stride in decentralized finance with preparations for an essential update. The proposed Lending Protocol amendment, which seeks to establish a native credit mechanism within the network, is nearing activation thanks to new support from validators.
Rising Validator Support
Community validator Vet recently announced that the Lending Protocol proposal has secured two additional affirmative votes. Currently, the amendment boasts the backing of 23 out of 35 trusted validators. To reach the necessary threshold, six more affirmative votes are required.
Known as XRPL, the XRP Ledger is an open-source blockchain network within the Ripple ecosystem. Implementing technical modifications on this network mandates reaching a specific consensus among trusted validators.
Vet remarked that the Lending Protocol has gained fresh validator support, drawing it closer to the activation threshold.
However, attaining the required votes doesn’t immediately trigger the update. At least 29 validators must support it to achieve the 80% supermajority threshold. Following this, a mandatory two-week activation period will commence.
XLS 66: A New Framework
The amendment, known as XLS 66, aims to introduce native credit functions to the XRP Ledger. This proposal is designed to enable fixed-term and unsecured lending, differentiating it from common crypto loan models that require borrowers to pledge assets exceeding their loan value as collateral.
According to the official XLS 66 documentation, the system relies on structures called Single Asset Vaults, where funds are pooled together. These assets can then be loaned out to borrowers under pre-defined conditions.
Tripartite Credit Structure
The proposed credit framework involves three primary stakeholders: depositors, loan facilitators, and borrowers. Depositors will allocate their crypto or other supported assets into the pool. Loan facilitators will handle borrower assessments and loan agreements, while borrowers will receive the loans and repay them according to set schedules.
This model could enable financial institutions and other entities to actively leverage capital on the XRP Ledger beyond merely holding or transferring assets. Deposited assets in credit pools may also generate returns, although interest levels will depend on loan volumes and assumed risks.
The official technical document indicates that the pooled funds are intended to be loaned out to borrowers under defined terms, with repayments scheduled accordingly.
Additional Amendments Under Review
Another amendment, LendingProtocolV1_1, currently has 21 affirmative votes. This version includes additional refinements, such as closed-end pools and updated interest accounting. Three separate proposals on the network are still under review and have not yet achieved a supermajority.
