1. How does DeFi lending work on the XRP Ledger?
XRPL's proposed lending system allows depositors to contribute assets to lending vaults while borrowers receive fixed-term loans arranged by loan brokers. Loan agreements, interest and repayment details are recorded on the blockchain, while credit assessments happen off-chain.
2. What are XLS-65 and XLS-66 on the XRP Ledger?
XLS-65 introduces Single Asset Vaults designed to pool deposits of one asset, such as XRP or stablecoins. XLS-66 establishes the proposed lending framework for managing loans, interest payments, repayment schedules and defaults.
3. What are Single Asset Vaults in XRPL DeFi lending?
Single Asset Vaults pool deposits of a specific asset and issue shares representing each depositor's proportional claim. Depositors may earn returns from borrower interest payments, but defaults and insufficient liquidity can affect withdrawals and asset values.
4. How can borrowers obtain loans through the XRPL lending protocol?
Borrowers would obtain loans through brokers who assess creditworthiness and arrange borrowing terms before recording agreements on XRPL. Loans can include fixed interest rates, repayment schedules and grace periods, with collateral arrangements handled outside the ledger.
5. What are the main risks of DeFi lending on the XRP Ledger?
Major risks include borrower defaults, insufficient first-loss protection, delayed withdrawals, unreliable credit assessments and operational failures. Investors must also verify whether the relevant lending amendments have been activated before assuming these features are available on the network.
