The XRP Ledger (XRPL) has taken another step toward native lending after LendingProtocolV1_1 opened for validator voting.
RippleX said the amendment introduces closed-ended vaults and cash-basis accounting for XRPL lending. It must activate before the separate LendingProtocol and SingleAssetVault amendments can proceed toward mainnet use.
The update is part of a broader lending architecture designed to support fixed-term, uncollateralized loans using pooled funds from Single Asset Vaults. The protocol relies on off-chain underwriting and risk management rather than automated onchain collateral liquidation.
LendingProtocolV1_1 Adds Closed-Ended Vaults
Unlike open-ended vaults, where users can enter and exit over time, closed-ended vaults move through three defined phases:
- Subscription
- Investment
- Redemption
Once the subscription period closes, no new shares can be created, preventing investors from entering mid-cycle after returns or risks have already changed.
| Vault Type | How It Works |
| Open-ended vault | Deposits and redemptions can occur continuously |
| Closed-ended vault | Deposits close before the investment phase begins |
| Subscription phase | Investors enter the vault |
| Investment phase | Capital is deployed into loans |
| Redemption phase | Investors can redeem after the lending cycle ends |
Table 1. Open-Ended vs. Closed-Ended XRPL Vaults
The closed-ended structure is intended to make returns easier to account for because all vault participants enter before the investment period begins.
The Upgrade Also Changes How Interest Is Counted
LendingProtocolV1_1 also introduces cash-basis accounting. Under the proposed model, interest is only recognized as income after the borrower actually pays it.
That is different from recognizing scheduled future interest before the payment is received. RippleX developers described the change as a more conservative accounting model because a vault’s reported asset value would reflect money already received rather than expected future payments.
For lenders, that means the vault’s reported AssetTotal would not include unpaid interest simply because it is scheduled.
The change becomes relevant for uncollateralized lending, where repayment depends on the borrower’s ability to meet the loan terms rather than an automated liquidation mechanism.
XRPL Lending Uses Off-Chain Underwriting
The XRPL lending framework is not designed like a typical overcollateralized DeFi lending protocol.
According to the XRPL documentation, the protocol supports fixed-term, uncollateralized loans funded by pooled assets in a Single Asset Vault.
There are three main participants:
- Loan brokers, which create vaults and manage loans
- Depositors, which provide capital
- Borrowers, which receive and repay loans
Loan brokers handle credit assessment and underwriting off-chain.
The protocol itself handles the onchain side, including loan origination, repayments, defaults and configurable fees.
That means XRPL’s lending model depends more heavily on underwriting and loan-broker risk controls than protocols where borrowers must deposit excess collateral before borrowing.
First-Loss Capital Is Designed to Protect Depositors
The lending framework also includes an optional first-loss capital mechanism.
A loan broker can deposit capital into the vault that acts as a buffer if a borrower defaults.
If the available first-loss capital falls below the required level, the broker can no longer issue new loans and stops receiving certain protocol fees until the buffer is restored.
This does not remove credit risk.
Depositors can still lose money if defaults exceed the amount covered by first-loss capital. The mechanism is designed to absorb part of a loss rather than guarantee repayment.
LendingProtocolV1_1 Is One of Three Required Amendments
The validator vote does not mean native XRPL lending is live yet. RippleX developers have said the lending system depends on three amendments as follows:
- LendingProtocolV1_1
- LendingProtocol
- SingleAssetVault
LendingProtocolV1_1 must activate before the other two can move forward.
The base LendingProtocol amendment provides the core lending engine, including loan origination, repayment, defaults and first-loss capital.
SingleAssetVault provides the pooled asset structure used to fund those loans.
LendingProtocolV1_1 then adds the newer closed-ended vault and accounting rules on top of that architecture.
Validator Approval Still Has to Clear XRPL’s Amendment Process
On XRPL, an amendment generally needs to maintain support from at least 80% of trusted validators for two consecutive weeks before it becomes active on mainnet.
If support falls below the required threshold during that period, the activation countdown resets, meaning there is no guaranteed activation date for LendingProtocolV1_1 yet.
The amendment must first gain and maintain the required validator supermajority.
XRP Ledger Version 3.4.0 Introduced the Amendment
LendingProtocolV1_1 was introduced with xrpld version 3.4.0, released on September 16.
The release added the amendment along with maintenance fixes and other server improvements.
XRPL documentation describes LendingProtocolV1_1 as an extension of the LendingProtocol and SingleAssetVault amendments rather than a replacement for them.
That explains why all three proposals are needed before the full lending framework can advance.
Native Lending on XRPL Is Not Live Yet
The validator vote is an important milestone, but users cannot yet assume that XRP Ledger lending is available on mainnet.
The existing XRPL documentation describes the lending framework as a protocol primitive requiring the LendingProtocol amendment.
Until the required amendments activate, lending applications cannot rely on the full native protocol in production.
This is also why announcements about projects planning to build on XLS-65 and XLS-66 should be separated from the status of the network upgrades themselves.
Projects can test and prepare integrations before the amendments are active, but that does not make native lending live on the XRP Ledger.
What Comes Next
The next step is validator support for LendingProtocolV1_1.
If the amendment reaches the required supermajority and maintains it for two weeks, it can activate on mainnet. Only after that can the related LendingProtocol and SingleAssetVault amendments continue through their own governance process.
The most important developments to watch are therefore the validator vote percentage, whether LendingProtocolV1_1 enters its two-week activation window and when the remaining lending amendments move forward.
Native XRPL lending is getting closer, but the protocol is still in the amendment process rather than fully deployed for mainnet lending.
What this means for you: XRP Ledger lending has not launched yet. The current vote is for the upgrade that adds closed-ended vaults and cash-basis accounting, and it must be activated before the rest of the native lending framework can proceed.
