Ripple’s XRPL Nears Launch of Native Lending Protocol, Signaling Market Evolution

• XRPL is on the verge of launching its native lending protocol according to a report, however, it would work without smart contracts. 

• A DEX Automated Market Maker (AMM) is also reported to be up for voting in addition to Decentralized Identity. 

According to the latest report, XRP Ledger (XRPL) is close to launching a financial market protocol in its ongoing development of a native lending protocol for the blockchain. This was also confirmed by Panos Mekras, co-founder of Anodos Finance.

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

Mekras referred to the presentation of Luc Bocahut, Product Director and Solutions Architect at XRPL Commons. Bocahut’s presentation as reviewed by CNF focused on the history of XRPL, and how it was designed to address the limitations of crypto and fiat currencies. 

The Evolution of the Blockchain

Over the years, XRPL has evolved to become one of the most robust layer 1 blockchains, supporting the likes of Non-Fungible Tokens (NFT). In addition, Bocahut mentioned the support for native decentralized exchange (DEX), as well as advanced payments and issued assets.

In the process of the presentation, the director introduced some features that are up for voting and those in development. Out of the list, the lending and borrowing protocol was highlighted to be in development. It is important to note that decentralized lending mostly uses smart contracts.

Interestingly, XRPL does not support that despite its rival, Stellar, introducing its first smart contract recently. It is reported that the Hooks protocol of the XRPL Labs was meant to introduce the smart contract functionality to the XRPL.

However, its broad acceptance has not been encouraging, causing a delay in the smart contract launch. 

Would the XRPL Lending Protocol Work with Smart Contracts?

Ripple’s Chief Technology Officer, David Schwartz earlier spoke about this, citing two potential problems faced by Hooks in the ecosystem. According to him, there is a substantial financial risk that could be posed by any potential flaws in the feature that could affect the integrity of the XRPL.

He also stated that adopting Hook makes the XRPL an Ethereum-like network. He believes that this could change the primary purpose of XRPL as a seamless payment protocol. 

The data presented by Bocahut suggests that the XRPL lending would work without a smart contract. According to Panos Mekras, the introduction of the DeFi lending protocol on the XRPL network would improve DeFi functionality. 

The Decentralized exchange Automated Market Maker (AMM) was also reported to be up for voting. According to the presentation, while this enhances the liquidity of tokenized assets, it enables liquidity provision opportunities. Decentralized Identity is also up for voting. This is an interoperable global standard that enhances identity management for compliance, authentication, and access management. Another feature up for voting is the XRPL Sidechain. This is a customized version of the XRPL meant to meet the needs of a specific use case while remaining interoperable. 

It is important to note that the XRPL builder would have to present any development to the community for discussion. After this stage, the builder could come up with a PR and set it up for voting. After the amendment gets 80% of the validators’ consensus for two weeks, it gets implemented. Its development can also be orchestrated by its several builders on the network including XRPL Labs and Ripple.