XRP And DeFi: The Roadmap That Tells It All

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Ripple has unveiled the next phase of its roadmap for the XRP Ledger (XRPL) in relation to institutional DeFi. The roadmap focuses on tokenization, privacy, and native lending, and plans to introduce more stablecoins on the network, which is a positive for XRP’s utility. 

Ripple Reveals Latest Roadmap For Institutional DeFi On The Ledger

In a blog post, Ripple noted that tokenization remains the central enabler of the XRP Ledger’s institutional strategy. Therefore, plans are in place to introduce the Multi-Purpose Token (MPT) standard by October on the network. The crypto firm explained that these MPTs are a flexible token standard that can carry essential metadata without relying on complex smart contracts. 

In relation to institutional DeFi on the XRP Ledger, Ripple noted that the MPT enables assets of bond issuers, money market funds, and structured products to be represented faithfully and traded natively on the network. The crypto firm further revealed that the next phase will enable the integration of MPTs into the DEX for easy trading, AMM liquidity pools, and cross-token payments. 

Furthermore, Ripple also plans to introduce a native lending protocol on the Ledger, which it described as the “most significant near-term milestone.” The lending protocol is set to go live in XRPL Version 3.0.0 later this year. The crypto firm said that the protocol introduces pooled lending and underwritten credit directly at the ledger level. 

Ripple remarked that the appeal of a native lending protocol on the Ledger is clear for institutions. The firm claimed that no financial institution will turn down low-cost capital if it can be sourced within KYC/AML standards. 

The protocol will pool liquidity from a global base of smaller investors into institutional-sized loans while maintaining compliance. For loan managers, this will be an opportunity to meet the rising demand for liquidity from TradFi by tapping into the growing crypto liquidity, specifically on the XRP Ledger. 

The Push For Programmable Privacy

Ripple revealed that one of the XRP Ledger’s next major upgrades is programmable privacy. The firm noted that for financial institutions, full transparency doesn’t always work, but that privacy features must still meet compliance and auditability standards. The first privacy-focused application, confidential MPTs, is said to already be in development and is scheduled to launch in the first quarter of next year. 

These confidential MPTs will support privacy-preserving collateral management, which Ripple noted is a critical requirement for institutional adoption of tokenized finance. As a whole, the crypto firm indicated that the goal is to introduce more stablecoins, RWAs, lending, compliance tooling, and privacy directly at the protocol level at a global scale. Meanwhile, Ripple stated that over the last year, the Ledger has broken into the top 10 chains for RWAs and has reached its first $1 billion month in stablecoin volume. 

At the time of writing, the XRP price is trading at around $2.84, down in the last 24 hours, according to data from CoinMarketCap.

Featured image from iStock, chart from Tradingview.com

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