The $XRP Ledger (XRPL) is aiming to establish itself as a heavyweight in decentralized finance (DeFi) with the XLS-66 proposal.
The aforementioned proposal is supposed to bring native lending and borrowing capabilities directly to the ledger.
If approved and activated, the amendment will allow users to generate returns on idle capital. This native lending protocol represents “the final DeFi frontier” for the network, according to XRPL validator and active community member Vet.
The XLS-66 lending protocol, explained
Introduced in XRPL version 3.1.0, the XLS-66d specification (officially titled “Lending Protocol”) was co-authored by Ripple developers Vytautas Vito Tumas and Aanchal Malhotra.
The protocol introduces the primitives that are required for on-chain credit origination. According to the GitHub proposal, the system facilitates “straightforward on-chain uncollateralized fixed-term loans, utilizing pooled funds with pre-set terms for interest-accruing loans.”
It intentionally skips the rather sophisticated mechanisms of automated on-chain collateral and liquidation management. Instead, the protocol prioritizes flexibility, reusability, and regulatory compliance.
XRPL researcher Vet explained that lenders will not issue funds blindly. The system relies heavily on off-chain underwriting and risk management. “The lender wouldn’t give you $XRP in the first place without knowing who you are and doing some off-chain checks on you,” Vet noted. The $XRP Ledger is used purely for “settlement logic largely, ownership and audit trails.”
The 80% validator hurdle
The native lending protocol is yet to go live. The amendment must secure an 80% supermajority approval from the network’s trusted validators for any new feature to be activated. Moreover, this threshold is supposed to be maintained for two consecutive weeks. It is currently sitting at a 17.14% consensus, with only 6 validators voting “Yes” and 29 voting “No” or abstaining.
