The XRP Ledger is advancing toward a lending framework that could grant depositors greater oversight over how their funds are deployed into credit markets. XRPL validator Vet has strongly encouraged fellow validators to examine the newest Lending Protocol updates as the network weighs the necessary amendments to bring lending live on the mainnet.
XRP Ledger Lending Protocol Adds Closed-Ended Vaults
In a recent post, Vet noted that Lending Protocol v1.1 brings two distinct vault modes: open-ended and closed-ended. Open-ended vaults permit participants to join and exit at will, allowing users to deposit tokens like XRP and RLUSD and retrieve their capital whenever the vault’s rules allow.
Closed-ended vaults establish a rigid framework for managing the credit lifecycle. According to Vet, these vaults function across three distinct stages: subscription, investment, and redemption.
Throughout the subscription window, the vault accepts incoming deposits. Participants supply assets and are issued shares in exchange. The vault then transitions into the investment stage, shutting its doors to fresh capital and allocating funds toward loans.
The redemption stage succeeds the investment period. Upon reaching its designated redemption date, the vault unlocks to permit withdrawals, allowing participants to claim their shares according to the final valuation of the vault.
Must read article!
XRP Ledger lending protocol has with v1.1 now two modes. Open ended vaults are always open, enter and leave anytime.
Closed ended vaults are the new addition, they add fixed phases to the credit lifecycle:
Phase 1) Subscription – Vault is open for deposits… https://t.co/NyTmjIhx3q
— Vet (@Vet_X0) September 30, 2026
RippleX Developers Explain How Closed-Ended Vaults Work
Further insights into the updated design are shared in an article by Shota Natenadze from RippleX Developers. The publication points out that both vault variants rely on identical Vault ledger objects and transaction formats, with the primary distinction centering on the timing of capital entry and exit.
Additionally, the closed-ended model alters how interest is handled in the vault’s ledger. Within LendingProtocolV1_1, interest is treated as actual revenue at the exact moment a borrower submits a payment. Consequently, the vault logs realized interest instead of projecting future earnings.
Interest distributions flow back into the vault via VaultDeposit utilizing the tfVaultDonation flag. These transfers expand the vault’s aggregate holdings without minting extra shares, ultimately raising the value of each individual share for current holders.
Three Amendments Must Activate Together
Vet also suggested that validators evaluate LendingProtocol v1 and v1.1 concurrently when casting votes on the lending architecture. RippleX Developers clarified that three separate amendments are required to launch lending on the XRPL mainnet: LendingProtocolV1_1, LendingProtocol, and SingleAssetVault.
The LendingProtocol component supplies essential lending mechanics, such as loan brokers, loan creation, debt repayment, default management, and first-loss capital protection. Meanwhile, SingleAssetVault establishes the foundational vault framework utilized by both open-ended and closed-ended variants.
The LendingProtocolV1_1 upgrade introduces closed-ended vaults along with cash-basis accounting, while simultaneously limiting new loan brokers exclusively to closed-ended vaults.
As detailed by RippleX Developers, this restriction prevents complications that continuous capital inflows and outflows might introduce to share pricing. Utilizing a closed-ended setup stops users from entering a vault midway through an active lending cycle and improperly capturing value from interest generated prior to their entry.
At present, the XRPL lending system will rely on closed-ended vaults for credit operations, whereas open-ended vaults stay accessible for alternative use cases. Vet’s guidance highlights the importance of upcoming validator votes in determining when lending capabilities arrive on the mainnet.