The protocol has two parts. A single asset vault pools a single asset and the lending layer transforms this pooled money into loans on defined terms. Both are still proposals, defined in technical projects known as XLS-65 and XLS-66, and remain subject to approval by the validators who manage the network. Features are available for testing on a development network but are not live.
Ripple’s primary use is short-term financing. A payments company holding reserves in RLUSD, its U.S. dollar-pegged stablecoin, may need liquidity to fund outgoing payments before a cross-border settlement is made two days later.
Instead of using a bank credit line or selling assets, it could borrow against the incoming settlement through an approved pool, with repayment automatically applied.
This is separate from XRP, the token the network is best known for, and RLUSD, which is one of the assets such a system could lend against. This is infrastructure aimed at institutions rather than a product that retail users would touch directly.
However, Ripple is also entering a crowded field. On-chain lending is already being executed at scale through protocols such as Aave, Compound, Maple, and Clearpool, which collectively hold billions in deposits.
However, Ripple says these systems were built around crypto-native governance, in which a protocol can change its risk rules through community votes, something he says institutions cannot opt-in to in advance. Its goal is to fix lending mechanisms at the base layer of the network so that behavior does not change under the lender, while keeping the network public rather than confining it to a closed group as some permissioned systems do.
