The XRP Ledger (XRPL) is expanding beyond payments and decentralized trading toward native credit infrastructure. Its Lending Protocol is designed to support fixed-term lending directly at the protocol level, combining blockchain settlement with off-chain credit assessment and underwriting.

The latest xrpld 3.4.0 release extends this architecture through the LendingProtocolV1_1 amendment, introducing closed-ended vaults and cash-basis accounting.

XRPL's Lending Protocol is designed for fixed-term, uncollateralized loans funded using assets pooled within Single Asset Vaults. The system involves three principal participants: loan brokers, depositors and borrowers.

Instead of requiring borrowers to overcollateralize loans with cryptocurrency, creditworthiness can be evaluated through off-chain underwriting and risk-management processes.

This differs from many existing DeFi lending systems where borrowers commonly deposit cryptocurrency worth more than the amount borrowed. XRPL could instead support credit-based lending while recording loan creation, repayment and settlement on-chain.

The protocol also supports optional first-loss capital, which loan brokers can contribute to absorb potential losses before they reach other vault participants.

Single Asset Vaults aggregate assets from depositors into structures that can supply capital for lending. Depositors receive shares representing their proportional ownership of a vault's assets.

During subscription, investors can provide capital. The investment phase allows loans to be originated, while the redemption phase determines when investors can redeem their shares. Under V1.1, newly created loan brokers must use closed-ended rather than open-ended vaults.

XRPL documentation also shows that vaults can hold XRP , trust-line tokens or Multi-Purpose Tokens (MPTs). Private vaults can use credentials and Permissioned Domains to restrict participation, potentially supporting institution-focused lending environments.

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