XRP Ledger Proposal Would Restrict Withdrawals From New Broker Vaults During Investment

A proposed XRP Ledger update would require loan brokers created after its activation to use vaults that block withdrawals during a preset investment phase, exposing depositors to potential loan losses.

At 3:55 p.m. ET Nov. 12 (20:55 UTC), the snapshot showed 22 of 35 validators voting for LendingProtocol, 22 for LendingProtocolV1_1 and 23 for SingleAssetVault. Each amendment needs 29 votes to begin the required two-week support period. The tally is up from the Oct. 22 readings of 19 votes for LendingProtocol and 21 for SingleAssetVault.

LendingProtocolV1_1 would make the closed-ended design mandatory for loan brokers created after the amendment activates. Each vault would pass through subscription, investment and redemption. Depositors could add or withdraw assets during subscription. Both actions would be disabled during investment, when assets may be lent out. Withdrawals would resume in redemption, but new deposits and loans would be barred. The vault’s phase dates would be set at creation and could not be revised.

A vault would hold one asset: XRP, a trust-line token or a Multi-Purpose Token. Depositors would receive shares representing proportional ownership in the pool. Share value could rise with income or fall with losses; when a loan is made, the principal goes to the borrower.

Loans under the proposal would be fixed-term and uncollateralized. Borrower screening and credit-risk management would occur off the ledger, while the protocol would handle loan and repayment mechanics. The requested principal, excluding fees, would go to the borrower. Depositors would keep shares in the vault but remain exposed if borrowers fail to repay.

A broker could put first-loss capital into the vault in the same asset as a cushion against defaults. The contribution would be optional and would not eliminate credit risk. V1.1 would recognize interest as income when a borrower makes a payment. Vaults created under the earlier accounting model would retain that model, and brokers formed before activation could continue lending from open-ended vaults.

Vault shares could be configured as transferable or nontransferable. Transferability alone would not guarantee a buyer or a particular sale price. Each amendment must first reach 29 votes and then maintain the required support for two weeks.