The XRP Ledger is pushing further into decentralized finance, with a set of native protocol upgrades designed to give both retail and institutional users access to lending and privacy tools directly on-chain, without relying on third-party smart contracts or bridges.

According to XRPL Foundation community leader and dUNL validator Vet, the proposed amendments cover native lending, privacy capabilities, and digital identity verification. The proposals, which include XLS-65, XLS-66, XLS-0096, and XLS-70, aim to build a comprehensive DeFi stack at the protocol level, eliminating the need for external smart contracts or bridges.

Native Lending Comes to XRPL

The Lending Protocol defined in XLS-65 and XLS-66 introduces pooled lending and underwritten credit directly at the ledger level. Single-Asset Vaults aggregate liquidity, issuing vault shares that can be transferable or non-transferable depending on configuration. XLS-66 then builds on these vaults to enable fixed-term, uncollateralized loans with pre-set amortization schedules.

On the institutional side, the upgrades are already attracting serious commercial interest. A new institutional credit fund backed by Ripple, Clearpool, and Cicada Partners is deploying RLUSD as a primary lending asset on XRPL, shifting the stablecoin from its initial role as a payment-focused asset into the domain of institutional credit collateral. This represents the first institutional lending product to utilize RLUSD on XRPL.

Clearpool, which has facilitated over $930 million in institutional loans since 2021, is responsible for building and managing the lending infrastructure, specifically utilizing its Lending Protocol and Single Asset Vault architecture. Cicada Partners, a firm that has underwritten more than $860 million in credit, manages the sourcing of borrowers, the establishment of loan terms, and ongoing credit risk monitoring. The fund is still being tested as the XRP Ledger lending and vault features await mainnet approval.

Privacy Features Designed for Compliance

Alongside the lending upgrades, a proposed privacy system aims to protect transaction details while keeping regulators and issuers in the loop. Confidential Transfers for Multi-Purpose Tokens (MPTs) enable institutional-grade privacy on XRPL by encrypting transaction amounts and balances using zero-knowledge proofs. Zero-knowledge proofs are in development to balance privacy, compliance, and scalability.

New and upcoming features, including permissioned domains, credential-based access, privacy-preserving transfers, and the XLS-65/66 lending protocol, are designed to meet regulatory and risk-management requirements for on-chain credit and payments. Together, these changes could make XRPL a more complete financial platform for institutions and everyday users alike.

Sources:
Ripple: Institutional DeFi on XRPL
Bitcoin.com News: Ripple Backs RLUSD Lending Push With Clearpool, Cicada
CoinDesk: Ripple Lays Out Institutional DeFi Blueprint for XRPL