Ripple unveils XRP Ledger plan to enhance institutional DeFi

Ripple has announced a roadmap for institutional decentralised finance (DeFi) on the XRP Ledger (XRPL) and a proposed vision for programmability.

Ripple aims to advance institutional DeFi and real-world assets (RWA) tokenisation, responding to the increasing adoption of blockchain-powered finance by institutions. This acceleration is driven by tokenised real-world assets, stablecoins, and decentralised liquidity markets.

The XRPL is designed to meet the demands of institutional DeFi by offering a compliant blockchain infrastructure for digital assets and cross-border transactions. It aims to enhance its features to provide expanded lending and more options for building on-chain financial products.

"The XRPL offers a robust, compliance-focused blockchain infrastructure required to scale and support seamless cross-border transactions, and institutional-grade decentralised finance (DeFi). Ripple will build new features that bring greater functions, expanded lending, and offer more ways to build onchain financial products," according to the announcement.

Ripple is also focused on introducing permissionless programmability to the XRPL. The initiative seeks to integrate the ledger's native capabilities with flexible custom on-chain business logic, enhancing its special features such as efficiency, reliability, and simplicity.

The XRPL ecosystem is enhanced by features like a native decentralised exchange (DEX), low transaction fees, rapid settlement times, and a compliance-friendly architecture. The ledger supports tokenised assets, stablecoins, and RWAs while facilitating institutional-grade features.

A central component of the XRPL ecosystem is its Automated Market Maker (AMM), guided by the XLS-30 standard, which aims to introduce protocol-level liquidity for a range of assets. The integration of AMM with the native order book (CLOB)-based DEX enables price optimisation and liquidity provision.

The XRP Ledger's advancements include a decentralised identity (DID) feature that enables the creation and management of decentralised identifiers, enhancing privacy and compliance for institutions. It allows for identity verification without centralised intermediaries.

Price oracles on the XRPL offer a native mechanism for real-time and accurate market data, crucial for transactions involving tokenised assets and cross-chain interactions. Protocol-native oracles bring off-chain data onto the ledger efficiently, bypassing third-party reliance.

Ripple Senior Software Engineer Mayukha Vadari outlined the role of Credentials as a building block for DID, critical for user verification in financial applications like tokenised RWAs.

The introduction of Multi-Purpose Tokens (MPTs) bridges fungible and non-fungible tokens, offering flexibility for tokenising and trading bonds and RWAs with enhanced metadata and functionality.

XRPL's proposed credit-based lending protocol seeks to reduce dependency on intermediaries, increasing transparency and security within institutional markets. The protocol facilitates on-ledger fixed-term lending with off-chain underwriting, promoting efficient risk management.

Ripple has also announced efforts to introduce 'Extensions,' enabling developers to customise XRPL features without new smart contracts. This approach allows specific use-case adaptations while maintaining network security and efficiency.

An EVM-compatible sidechain is set to launch on the XRPL in Q2 2025, aiming to attract developers and protocols requiring Ethereum's Solidity language or EVM.

The roadmap reflects Ripple's commitment to strengthening the XRPL's position in regulated onchain finance, supported by liquidity, compliance, and seamless integration features for institutional use.