Ripple Moves to Add Institutional On-Chain Collateral Lending Protocol to XRP Ledger
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Ripple is moving to introduce an on-chain collateralized lending protocol for institutional users on the XRP Ledger.
CoinDesk reported on June 29 that Ripple is developing the XRPL Lending Protocol, which would allow institutions to do more than issue or transfer assets held on the XRP Ledger. It would also let them borrow against those assets as collateral.
The protocol separates the roles of the blockchain and financial institutions. Once a loan is issued, the blockchain automatically handles pool management, interest calculations, repayment processing and default procedures. Financial institutions remain responsible off-chain for borrower credit assessments, loan approvals and setting loan terms.
The protocol consists of a Single Asset Vault and a Lending Layer. The Single Asset Vault provides liquidity for a specific asset, while the Lending Layer deploys those funds into loans under preset terms.
