Ripple plans to introduce on-chain lending protocol on XRPL

Ripple is working to introduce a lending protocol for institutions on the XRP Ledger (XRPL), CoinDesk reported. The initiative, called the XRPL Lending Protocol, aims to allow institutions to use their on-chain assets as collateral for loans, rather than simply issuing or transferring them. The protocol is designed to separate the roles of the blockchain and financial institutions. After a loan is issued, the blockchain automatically manages the fund pool, calculates interest, processes repayments, and handles default procedures. Meanwhile, financial institutions will continue to conduct traditional off-chain tasks, including borrower credit assessment, loan approval, and setting loan terms. The protocol is composed of two parts: a Single Asset Vault, which gathers a single asset to create a liquidity pool, and a lending layer that deploys these funds as loans according to set conditions.