Ripple’s bank-lending system moves closer to launch on the XRP Ledger
Ripple's proposed XRP Ledger lending system has gained three validator votes in about three weeks, reaching 22, but it and its required vault amendment must each hold 29 votes for two consecutive weeks before activation.
The system would offer fixed-term loans without borrower collateral, leaving depositors reliant on brokers' off-chain credit assessments, risk management and first-loss capital. Developers are preparing another lending amendment while approval remains pending, following a cleanup fix that went live on Nov. 4.
Validator progress
As of Wednesday, data showed 'LendingProtocol' and its first patch, LendingProtocolV1_1, at 22 yes votes each. 'SingleAssetVault,' the change that creates the pools lenders deposit into, had 23. On Oct. 19, the lending system had 19 votes and the vaults had 21.
The XRP Ledger changes its rules through amendments. An amendment goes live only after more than 80% of the 35 validators on the network's default list (29 of them) back it for two straight weeks.
System design
The design asks a lot of whoever puts money in. A lender deposits XRP or another token into a vault, and a loan broker lends it out for a fixed term while borrowers post no collateral.
The system 'relies on off-chain underwriting and risk management,' which leaves the broker's judgment — backed by some first-loss capital the broker puts up — as the only protection for depositors.
Future developments
A Nov. 4 pull request, #8685, is still open and would add a third lending amendment, LendingProtocolV1_2. It lets a bundle of transactions that opens a loan, together with the escrows tied to it, fail as one if another loan on the same broker lands first.
SingleAssetVault now needs six more yes votes, and the lending amendment needs seven. Lending can't open until two weeks after both hold 29.
Related
