XRP Ledger plans big upgrades to facilitate institutional DeFi

XRP Ledger (XRPL) has outlined a strategic roadmap to enhance institutional DeFi and programmability within its ecosystem.

This initiative focuses on integrating compliance-driven solutions, expanding lending capabilities, and introducing innovative tokenization tools to solidify XRPL’s role in institutional finance.

With these advancements, financial institutions will gain new opportunities to tokenize real-world assets (RWAs), utilize stablecoins more effectively, and participate in decentralized liquidity markets.

XRPL’s upcoming features include:

Decentralized Identity

According to the roadmap, XRPL will integrate decentralized identity (DID) and credential-based verification this year to strengthen compliance and security.

This system allows institutions to establish permissioned domains where only verified users can participate. A permissioned decentralized exchange (DEX) is also in development, ensuring all participants meet regulatory requirements without compromising decentralization.

According to Ripple:

“Permissioned Domains and Permissioned DEX protocols enforce membership and compliance rules by requiring the appropriate DID-based Credentials, all while preserving the open nature of the XRPL.”

This approach addresses the growing need for on-chain financial infrastructure that aligns with global financial regulations.

Multi-Purpose Tokens

Another key upgrade for the network is the introduction of Multi-Purpose Tokens (MPTs), which provide a flexible framework for representing traditional financial instruments.

Traditional financial assets, such as bonds and structured products, often require extensive metadata that fungible tokens cannot efficiently capture. To address this, XRPL developers have introduced MPTs as a flexible standard that bridges fungible and non-fungible token attributes.

This means that MPTs will enable institutions to tokenize and trade RWAs with enhanced flexibility and unlock new use cases in digital finance.

XRPL Lending

XRPL is introducing an on-chain lending protocol designed specifically for institutional finance.

This system will integrate with Ripple Payments, DEX, RWAs, and stablecoins while leveraging a default RLUSD vault for liquidity optimization.

Institutions will have access to lending pools with permissioned access and fixed-term, uncollateralized lending options.

The lending mechanisms will facilitate compliant on-chain credit markets, allowing banks, fintech firms, and asset managers to participate in DeFi with regulatory safeguards. Validator voting for these upgrades is expected in Q2 2025.

Programmability update

This year, XRPL will also enhance its programmability with Extensions, a lightweight framework that adds modular functionality to on-chain features without introducing full smart contracts.

This framework will allow developers to customize functionalities such as escrows and automated market makers (AMMs) while maintaining security and efficiency.

The roadmap for programmability includes a phased rollout. Smart Escrows are expected to be tested in early 2025, and smart contracts will follow later in the year.

EVM Sidechain

Additionally, XRPL’s Ethereum Virtual Machine (EVM) Sidechain will launch on the mainnet in Q2 2025, enabling Ethereum developers to deploy decentralized applications (dApps) using Solidity.

This cross-chain solution allows for greater interoperability and access to XRPL’s ecosystem. The EVM Sidechain is expected to attract developers seeking interoperability while benefiting from XRPL’s established financial infrastructure.

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