XRP Ledger Currently Developing Native Lending Protocol

The XRP Ledger (XRPL) is on the verge of welcoming a financial market protocol, as data confirms the ongoing development of a native lending protocol for the blockchain.

Panos Mekras, co-founder of Anodos Finance, recently called the XRPL community’s attention to the development, citing information from a presentation carried out by Luc Bocahut, Product Director and Solutions Architect at XRPL Commons.

BREAKING: A native lending protocol seems to be in development for the XRPL. Increasing DeFi functionality on XRPL seems to be the main focus and I'm here for it.

With a built-in DEX and soon AMM, a built-in decentralized money market protocol makes sense to be the next core… pic.twitter.com/4dSYpfOij3

— Panos 🔼{X} (@panosmek) February 22, 2024

In the presentation, Bocahut spotlighted the XRP Ledger’s history and the constant improvements the network has witnessed since its inception in 2012. These include the support for non-fungible tokens (NFT), which came up in September 2022 following the implementation of the XLS-20 amendment.

The XRPL Commons Product Director further pointed out that the XRP Ledger features a native decentralized exchange (DEX), a token asset control mechanism, features for advanced payments, issued assets, and now, non-fungible tokens.

XRPL Set to Feature DeFi Lending

As the commentary on the network’s development progressed, Bocahut presented a slide highlighting the features that are already up for voting and those undergoing development. One of these features under development is a lend/borrow protocol.

Notably, such a protocol would facilitate the implementation of a lending feature native to the XRPL, allowing users to lend their tokens for yield generation or borrow assets. Decentralized lending is one of the most utilized forms of DeFi, with AAVE and MakerDAO leading the market.

However, decentralized lending typically features the use of smart contracts in which users deposit their tokens. Nonetheless, the XRP Ledger currently does not support smart contracts despite its rival Stellar recently welcoming its first smart contract this week.

The Hooks protocol from the XRPL Labs, which looks to introduce the functionality of this smart contract to the XRPL, has not enjoyed broad acceptance due to perceived risks, according to Ripple’s CTO David Schwartz. This has delayed the launch of smart contracts on the network.

However, data from Bocahut’s slide suggests that the upcoming XRPL lending protocol would work without smart contracts. This entails that the protocol would not have to wait for the implementation of smart contracts before deployment.

Bolstering DeFi Functionality on the XRP Ledger

Panos Mekras emphasized that the launch of a DeFi lending protocol on the XRPL would move in the direction of bolstering DeFi functionality for the network. The native XRPL DEX and the upcoming AMM feature are two protocols that further solidify this move.

Notably, the XRPL is in a constant state of evolution. This evolution comes from pivotal developments that introduce new features to the network. The developments can be facilitated by any of the numerous builders on the blockchain, including XRPL Labs and Ripple.

Once an XRPL builder introduces a development, they must present it to the XRPL community for discussion. Following these discussions, the builder could then propose a PR and put the feature up for voting as an amendment. It gets implemented when the amendment attains 80% validator consensus for two weeks.

As of press time, the lending protocol is still undergoing development, with little details on its nature and the entity behind it. Following its development, the protocol would be subject to public discussion, where useful information on its nature would become public knowledge.