Validator voting is now open for the LendingProtocolV1_1 amendment on the XRP Ledger (XRPL). Authored by RippleX developers, the amendment introduces closed-ended vaults and a cash-basis accounting model—prerequisites that must activate before native on-chain lending can fully launch on the network.
The proposal builds directly upon the foundational XLS-65 Single Asset Vault and XLS-66 Lending Protocol standards, setting up the necessary risk management infrastructure for fixed-term, uncollateralized loan execution on the XRPL.
Closed-Ended Vaults vs. Open-Ended Vaults
To enable loan brokers on-chain without exposing yield to arbitrage, LendingProtocolV1_1 restricts lending operations exclusively to closed-ended vaults.
Because open-ended vaults process continuous deposits and withdrawals, allowing loan brokers on open-ended structures creates time-of-entry vulnerabilities where opportunistic depositors could deposit right before yield events and extract unearned returns.
Closed-ended vaults eliminate this design risk by operating across three distinct lifecycle phases:
- Subscription: The vault opens for a set timeframe (
SubscriptionDate) to collect deposits and mint vault shares (MPTs). - Investment: The subscription window closes, locking the vault against new deposits. Capital is deployed into loans, and incoming interest increases the Price Per Share (PPS) for existing share holders without diluting supply.
- Redemption: After the
RedemptionDate, the vault reopens for withdrawals, letting depositors redeem shares for principal plus accrued yield.
Safer On-Chain Financials via Cash-Basis Accounting
Alongside new vault structures, LendingProtocolV1_1 replaces accrual-style projections with cash-basis accounting.
- Legacy Model (Accrual): Recognized all scheduled loan interest upfront at the time of origination, marking expected yield as income immediately.
- Updated Model (Cash-Basis): Records interest as income only when payments are actually executed and received by the vault.
This prevents artificial inflation of a vault’s total assets (AssetsTotal) and ensures that reported yield accurately reflects realized on-chain cash flows.
The Activation Roadmap
For native lending functionality to go live on the XRPL mainnet, validators must pass three interdependent amendments:
SingleAssetVault(XLS-65): The core primitive enabling pooled asset vaults.LendingProtocol(XLS-66): The base lending engine covering loan brokers, defaults, and first-loss capital.LendingProtocolV1_1: The active voting package enforcing closed-ended vault constraints and cash-basis accounting.
Under XRPL governance rules, the amendment requires sustained support from at least 80% of trusted validators over a two-week voting window to reach mainnet activation.
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