Borrowing from a vault
3 minDifficulty Checked 2026-11-10- Loans come from a vault that pools one asset from many depositors.
- A loan broker checks each borrower off the ledger and co-signs every loan.
- There is no collateral. Depositors carry any loss the broker's cover does not absorb.
Picture a shared savings jar. Many people put the same kind of money in it, for example one stablecoin. A loan broker runs the jar and lends some of the money out.
A borrower gets a loan on fixed terms. The terms set the amount, the interest rate, how often to pay and how many payments there are. The borrower pays back in installments until the loan ends.
The broker decides who can borrow. That check happens off the ledger, the way a bank reviews a loan application. The ledger records the loan and enforces the payment rules.
This is not open borrowing for anyone. Nobody can take money from the jar alone. Every loan needs a signature from both the borrower and the broker.
There is also no collateral. Most DeFi lending protocols make borrowers lock up assets first and sell them if prices fall. This protocol does not. If a borrower stops paying, the broker's own deposit, called first-loss capital, covers part of the loss. The people who put money in the jar carry the rest.
So a depositor is trusting the broker's judgment. Interest is the reward for taking that risk.
On 2026-11-10 the Lending Protocol was not enabled on mainnet. Validators were voting on it, and on a follow-up amendment called LendingProtocolV1_1.
XLS-66 adds two ledger entries and nine transactions.
| Entry | What it holds |
|---|---|
LoanBroker | Fee settings, debt owed to the vault, first-loss capital |
Loan | One agreement: principal, rates, schedule, balances |
Transactions: LoanBrokerSet, LoanBrokerDelete, LoanBrokerCoverDeposit, LoanBrokerCoverWithdraw, LoanBrokerCoverClawback, LoanSet, LoanDelete, LoanManage and LoanPay.
LoanSet creates a loan. It carries a CounterpartySignature, so the borrower and the LoanBroker owner sign the same terms. Either side can start the transaction. The other side checks the terms and adds its signature. The spec chose this over an offer-and-accept flow, so the loan settles in one transaction with no pending offer on the ledger.
When LoanSet succeeds, the borrower receives the principal minus any origination fee.
The spec describes "uncollateralized fixed-term loans" with off-chain underwriting. It leaves out on-chain collateral and liquidation on purpose. Its security section says the protocol offers no on-chain protection against default, so every participant must do their own checks.
The amendment LendingProtocol first shipped in rippled 3.1.0 in January 2026, together with SingleAssetVault. On 2026-11-10 both were supported by the server software and not enabled on mainnet.
Live count: Amendments page.
Related: Where the money comes from, Single Asset Vault.
- XLS-66 Lending ProtocolRead 2026-11-10
- Lending ProtocolRead 2026-11-10
- Introducing XRP Ledger version 3.1.0Read 2026-11-10
