Key Highlights;

• Ripple developers propose a native lending protocol for the XRP Ledger to boost DeFi capabilities.
• The new features could significantly increase the functionality and value of XRP in the DeFi sector.

Yello ParadiseSquad! Check out the latest breakthrough in blockchain technology! Ripple’s very own Aanchal Malhotra and Vito Tumas have unveiled a game-changing update for the XRP Ledger—a proposal to introduce a native lending protocol. This groundbreaking development is poised to expand the network’s decentralized finance (DeFi) features and enhance XRP’s practicality across the financial ecosystem.

How Does the Lending Protocol Work?

Detailed by RippleX on X (formerly Twitter), the protocol is designed to facilitate peer-to-peer (p2p) borrowing and lending of digital assets without the need for traditional intermediaries. It’s built on a modular design that emphasizes flexibility and reusability, introducing three new specifications:

• XLS-64d: Allows a single pseudo-account to manage multiple ledger entries, tracking balances and issuing tokens.

• XLS-65d: Creates a ‘Pool’ ledger entry for managing a single tokenized asset pool.

• XLS-66d: Manages assets for Liquidity Providers (LPs), introducing off-chain underwriting, on-chain agreements, and comprehensive loan management.

DeFi Integration and Operations

Liquidity Providers will deposit their crypto assets into lending pools to earn interest, managed by ‘Pool Delegates’. These delegates are responsible for sourcing capital, providing loans, and agreeing on loan terms with borrowers—initially negotiated off-chain then recorded on-chain.

Unique Features and Security Measures

This protocol primarily supports fixed-term loans based on pre-agreed interest terms between the Pool Delegate and the borrower. Notably, it eliminates the need for collateral through innovative off-chain underwriting and risk management introduced by XLS-66d. Additionally, a first-loss protection scheme will safeguard lenders against potential defaults, with Pool Delegates providing the first-loss capital.

Impact on the XRP Ecosystem

This update is a significant boost for the XRP ecosystem, likely influencing XRP’s market value positively over time. It complements other recent developments within the ecosystem, such as the proposed launch of a stablecoin and a newly launched Automated Market Maker (AMM).

Current Market Status

As of now, XRP is trading at around $0.5, showing a modest increase of over 1.13% in the last 24 hours, as per CoinMarketCap data.

So, ParadiseSquad, as Ripple continues to innovate and push the boundaries of what’s possible within the blockchain and financial sectors, keep an eye on how these advancements might transform the broader crypto landscape! Stay tuned for more updates and get ready to see how these new tools might revolutionize DeFi!