Aanchal Malhotra and Vito Tumas from Ripple have put forth an innovative plan for a lending feature as part of the XRP Ledger (XRPL)’s native system. If approved, this change could broaden the XRPL’s decentralized finance (DeFi) offerings and enhance the use of XRP.
What The Lending Protocol On XRP Ledger Is About
In a recent update on X platform (previously Twitter), Ripple’s development team, RippleX, explained that their new peer-to-peer (p2p) lending protocol enables users to borrow and lend digital assets directly with each other, bypassing the need for extra intermediaries. The design of this protocol prioritizes adaptability and reusability through a modular structure.
In addition, the modular structure will include three distinct specifications. The first, named XLS-64d, enables multiple ledger entries to be linked to a solitary pseudo-account, facilitating the monitoring of balances and token distribution. The second specification, labeled XLS-65d, establishes a new “Pool” ledger entry for managing a unified pool of tokenized assets.
XLS-66d is the latest version, following XLS-65d, designed for managing assets of Liquidity Providers (LPs). This new specification builds upon the previous one and includes features such as off-screen underwriting, smart contracts for agreements, and loan management. According to RippleX, this is how the lending system will function: LPs will place their cryptocurrencies into a shared pool to accrue interest.
Pool Delegates will oversee the management of these lending pools. They will be tasked with bringing in funds from potential investors and extending loans to approved borrowers. The details of the loan agreements, including terms, will be negotiated off-chain between the delegates and borrowers before being documented on the blockchain.
Lending Protocol Will Focus On Fixed-Term Loans
The proposed lending system will primarily deal with loans of a set duration, with the terms for interest being predetermined between the Pool Delegate and the borrower. Notably, the requirement for collateral is waived due to the off-site underwriting and risk assessment provided by XLS-66d.
In case of a borrower’s default, lenders will benefit from a safety net in the form of a first-loss protection scheme. Pool Delegates are responsible for supplying the necessary funds to cover any resulting losses. These loans will then be overseen through a new “Loan” account in our ledger system.
The Loan ledger object is responsible for managing loan financing and processing withdrawals. It determines payment quantities and schedules, as well as handling interest and principal payments. In case of borrower default, it takes charge of loan recovery efforts.
This growth is certainly beneficial for XRP‘s community and might boost XRP’s value in the future. Additionally, it follows other encouraging developments within the ecosystem. For instance, there are plans to introduce a stablecoin on the XRP Ledger, as well as the recent debut of an Automated Market Maker (AMM).
Currently, XRP is priced at approximately $0.49 during this writing, representing a 1% increase based on recent data from CoinMarketCap.
Read More
- SOL PREDICTION. SOL cryptocurrency
- USD ZAR PREDICTION
- BTC PREDICTION. BTC cryptocurrency
- EUR ILS PREDICTION
- USD COP PREDICTION
- CKB PREDICTION. CKB cryptocurrency
- TAO PREDICTION. TAO cryptocurrency
- SEILOR PREDICTION. SEILOR cryptocurrency
- IQ PREDICTION. IQ cryptocurrency
- TROY PREDICTION. TROY cryptocurrency
2024-04-17 20:11