Ripple-backed RLUSD lending fund waits for XRP ledger verifiers to vote

Ripple teamed up with Clearpool and Cicada Partners to launch the RLUSD lending fund, but had to wait for the validator to vote.

Ripple, as a limited partner, participated in investing in the new RLUSD lending fund jointly established by Clearpool and Cicada Partners. Its investment terms are the same as other supporters, and the specific investment amount is not disclosed.

The fund will not be able to issue any loans on the XRP Ledger main website until two pending amendments receive an absolute majority of 80% of the validators. As of August 10, the approval rating was about 37-40%, compared with about 17-23% in March.

A re-audit of lending codes by security firm Halborn showed no serious or high-risk vulnerabilities were found. This is one of many security steps completed before the vote.

The real key to determining whether the fund can operate this year is the validator vote, and the current situation is still not optimistic. Two amendments to XRP Ledger, XLS-65 and XLS-66, require 80% network validator support for two consecutive weeks before ledgers can issue, service and repay loans on their native systems. According to the latest public data on August 10, the support rate for XLS-65 is approximately 40%, and that for XLS-66 is approximately 37%. Both have approximately doubled from the 17%-23% in March, but they are still only about half of the support rate required for primary online lines.

Clearpool and Cicada Partners 'practical work

This week, Ripple, Clearpool and Cicada Partners jointly announced a lending plan that allows fintech companies, payment institutions and cryptocurrency service companies to borrow RLUSD as working capital and repay it in the same stablecoin. Clearpool, which will be responsible for building the credit infrastructure, says it has facilitated more than $950 million in institutional loans since 2021. Cicada Partners, acting as a general partner, is responsible for finding borrowers, setting loan covenants and monitoring their financial health, and has underwritten more than $860 million in credit. Ripple's role in the partnership is narrower than the announcement suggests: it is just one limited partner among many institutional co-investors, providing funding and settlement channels, but not a loss guarantor.

In Clearpool's own words, the selling point of this project is that it skips another cyclical DeFi revenue model. Clearpool wrote in the announcement: "Today, about 98% of DeFi's revenue comes from market mechanisms. The funds are mainly revolving and are not used in the real real economy." In this design, RLUSD flows to businesses with actual accounts receivable and payable, rather than providing collateral for more cryptocurrency transactions.

Two amendments before RLUSD's main online launch

The point is, none of this currently works on the main network. XLS-65 creates single-asset vaults, pools of single tokens and are managed according to fixed rules;XLS-66 builds a lending agreement on top of them that processes loan terms, interest and repayments directly on the ledger rather than through smart contracts. Currently, both amendments are limited to XRP Ledger's development network, where Clearpool and Cicada are testing both lenders and lenders 'processes for technical demonstrations.

Ripple-backed RLUSD lending fund awaits XRP Ledger validators vote

Ripple has been preparing for this for months, and the company is also using it as part of a broader push for blockchain and digital asset adoption. According to Ripple, the two amendments were submitted to verifiers for a vote in late January and subsequently went through nine rounds of review, including a private audit by security company Halborn, a $200,000 public vulnerability bounty program that found 94 issues, and formal verification efforts. Halborn's latest re-audit found a total of five unresolved issues, and Ripple said there were no serious or high-risk vulnerabilities and all issues had been resolved. Ripple calls these underlying native features "one of the most important new financial features added to XRP Ledger since 2012."

Ripple's dual role: referee and supporter

There is a structural issue here that deserves to be clearly pointed out. Ripple issued RLUSD to support the ledger on which the fund relies, and is now an investor in a fund that does its entire business by borrowing the same stablecoin and earning interest. The XRP ecosystem has also recently addressed a number of security issues, including warnings about counterfeit XRP reward verifiers, highlighting the importance of users needing to distinguish legitimate XRPL activity from fraud. Clearpool and Cicada disclosed the arrangement themselves, and Ripple's shareholding is not covered by loss guarantees.

XRP traded at about US$1.30 this week, up about 20% in 24 hours and about 30% in the seventh day. The rally coincided with fund announcements and news of the expansion of the U.S. Treasury repurchase program. The circulation supply of RLUSD is also climbing. After an additional issuance of US$30 million in mid-August, the circulation has exceeded 1.7 billion, and its market value exceeded US$1.6 billion in May. For every loan eventually issued by the fund, XRP is also required to be held to pay book fees and account reserves, which is considered to be Ripple's direct mechanism for the XRP needs demonstration.

Future Outlook

Please pay close attention to the validator data. If XLS-65 and XLS-66 maintain 80% support for two consecutive weeks, the amendment will take effect so that Clearpool's development network demonstration can be advanced to the main online line. If support stagnates at 30% and 40% as it did in the spring, then Ripple's newly invested fund will remain as it is: a limited partnership and a plan waiting for an infrastructure that does not yet exist on the network it relies on. The move also comes as Ripple expands its regulated business in Europe after receiving a full MiCA license in Luxembourg, allowing it to provide regulated crypto asset services in the European Economic Area.