Ripple is actively pushing to introduce an on-chain collateralized lending protocol targeting institutional investors on the XRP Ledger (XRPL). The plan goes beyond simple asset issuance and remittance functions, aiming to build a financial ecosystem where users can borrow against their held assets, thereby expanding the DeFi utility scope of XRPL.

According to cryptocurrency media outlet CoinDesk, Ripple is laying the groundwork for financial institutions to operate lending services using on-chain assets as collateral through the 'XRPL Lending Protocol.' The most notable feature of this protocol is the clear separation of roles between the 'blockchain' and 'traditional financial institutions.'

Post-loan management processes, such as liquidity pool operation, interest calculation, repayment management, and default handling, are automated on the blockchain through smart contracts. Meanwhile, core review procedures, including borrower credit assessment, loan approval, and the determination of limits and interest rates, are handled off-chain by traditional financial institutions. This implements a hybrid structure that combines the review system of traditional finance with the automation capabilities of blockchain.

This protocol consists of two core components:

• Single Asset Vault: Deposits a single asset to create the liquidity (funding) needed for lending • Lending Layer: Executes and manages loans based on the created liquidity according to pre-set conditions

The industry expects that the introduction of this feature will significantly boost asset utilization within the XRPL ecosystem. In particular, as institutional investors can easily secure liquidity using their digital assets as collateral, the use cases for blockchain among corporations and the financial sector are likely to expand.

However, since the protocol inherently requires an off-chain review process by financial institutions, the actual market adoption rate of the service is expected to be influenced by the actions of participating institutions and the regulatory environments of various countries.

[This article was written with the assistance of AI. This article does not constitute investment advice, and any losses arising from virtual asset investments may be borne by the investor.]