The XRP Ledger is fixing its new lending feature before a single loan has been issued, adding a second code amendment to repair the system while it still sits in the network's approval queue.
\n\n\n\nThe Ledger's lending protocol, a core DeFi component enabling on-chain, fixed-term, unsecured loans drawn from pooled funds, was introduced through an amendment called LendingProtocol, which is still open for validator voting.
\n\n\n\nRather than waiting for that version to take effect before fixing it, developers published a follow-up version, LendingProtocolV1_1, which corrects the issues in the original before it even activates. The documentation now lists both amendments as requirements for the feature, meaning the network will adopt the corrected version from the outset.
\n\n\n\nThis approach reflects how changes reach the XRP Ledger. New features and fixes are rolled out as amendments that need the backing of at least 80% of trusted validators over a two-week period before they are activated.
\n\n\n\nSince the original lending code has not yet gone through that approval process, fixing it with a second amendment avoids rolling out a known-flawed system on the live network and then scrambling to repair it afterwards.
\n\n\n\nThe protocol itself was built for institutional credit rather than the collateral-and-liquidation model common in DeFi. It relies on off-chain credit analysis to assess borrowers and uses “first-loss capital”, a reserve that a loan broker deposits to absorb the initial impact of defaults, instead of automated on-chain collateral. Issuers retain compliance tools, including the ability to freeze accounts or claw back funds.
\n\n\n\nThis caution follows a similar incident elsewhere in the Ledger's code. Developers recently disclosed and fixed a critical flaw in the XRP Ledger's payment mechanism that could have allowed an attacker to mint counterfeit XRP, a bug that lay dormant for around a decade before a researcher identified it. Fixing the lending code before launch reflects a more cautious stance towards new functionality.
\n\n\n\nThe lending feature is part of a broader expansion of credit and DeFi capabilities on the XRP Ledger, which has been adding the financial market infrastructure that Ripple and other firms have long said was missing.
\n\n\n\n* Translated and edited with permission from Decrypt.
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