XRP could soon be lent to institutions and the cryptocurrency's holders could then get an opportunity to earn institutional-grade yield.
Edward Hennis, the staff software engineer at Ripple , provided details about the XRP Ledger lending protocol on Dec. 19.
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Once launched, the protocol-native lending system will bring fixed-term, fixed-rate, and underwritten credit in XRP for institutions.
Crypto lending on XRP Ledger will involve each loan sitting in its own single asset vault (SAV).
An SAV is like a water tank that holds only one type of water. So, it will hold only one asset (XRP or the RLUSD stablecoin issued by Ripple), Hennis explained.
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Use cases of institutional lending on XRP Ledger
Once the protocol becomes a reality, it has several use cases, Hennis said.
Market makers would be able to borrow XRP or RLUSD for inventory and arbitrage. Since they would be borrowing, they won't have to tie up their own funds. They can hedge their risks (so price moves don't hurt them), profit from small price gaps, and provide liquidity across multiple exchanges more efficiently—all without putting their balance sheet at risk.
Payment service providers would be able to borrow RLUSD to pre-fund instant merchant payouts. They can borrow the stablecoin for 1-3 days to address slow card networks and banking settlement windows.
Fintech lenders would be able to borrow XRP for short-term working capital.
Related: Ripple CEO hails billion-dollar XRP win
XRP's $115 billion market cap could be lent to institutions
However, protocol-native credit lending on XRP Ledger can only become a reality if the validators vote on the proposal in the affirmative in late January.
If approved, XRP's market cap of $124 billion ($115 billion at the time of writing) can be lent to institutions and XRP holders can earn real yield instead of their holdings lying idle, Hennis said.
The goal is to turn XRP Ledger from a payments-firm ledger into a broader institutional finance platform by inventing new productive roles for XRP and RLUSD. It would position the Ledger as a settlement and credit infrastructure for institutions.
With a market cap of $115 billion, XRP is the fifth-largest cryptocurrency. It was trading at $1.89 at the time of writing.
RLUSD, pegged 1:1 to the U.S. dollar, has a market cap of $1.35 billion and accounts for 0.44% of the total stablecoin market cap.
This story was originally published by TheStreet on Dec 22, 2025, where it first appeared in the Innovation section. Add TheStreet as a Preferred Source by clicking here.
