Ripple backs new credit fund using RLUSD stablecoin on XRP Ledger

Ripple joins partners to launch RLUSD-based lending fund

Ripple, a company behind the XRP cryptocurrency, is backing a new credit fund that will lend its RLUSD stablecoin to fintech and payments firms. The fund is a partnership with Clearpool, a lending platform, and Cicada Partners, a credit manager. RLUSD is a type of cryptocurrency designed to keep its value stable, usually pegged to the U.S. dollar.

The fund will provide working-capital loans in RLUSD, but it is not yet active. Two key features needed for the fund—a lending protocol and single-asset vaults—are still awaiting approval on the XRP Ledger, the blockchain where XRP transactions occur.

How the fund will work

• Clearpool is building the lending infrastructure for the fund.
• Cicada Partners will source borrowers, set loan terms, and manage credit risk.
• Ripple will invest in the fund as a limited partner, alongside other investors.
• Borrowers will receive and repay loans in RLUSD, creating demand for the stablecoin.
• The fund’s size and Ripple’s financial commitment have not been disclosed.

Key features still need approval

The fund depends on two proposed upgrades to the XRP Ledger: XLS-66 (a lending protocol) and XLS-65 (single-asset vaults). These upgrades are still in the voting process and have not been activated on the main network. Clearpool is currently testing the integration on a development network.

The lending protocol (XLS-66) will handle issuing and repaying loans directly on the ledger. The vault system (XLS-65) will pool money from multiple lenders under a manager, in this case, Cicada Partners.

Partners’ track records

Cicada Partners says it has underwritten over $860 million in credit. Clearpool claims it has facilitated more than $930 million in institutional loans since 2021. Ripple will not guarantee losses but will participate on the same terms as other investors.

XRP’s role in the fund

XRP, the cryptocurrency associated with Ripple, will not be lent out through the fund. Instead, it will only be used for transaction fees and to meet the minimum balance requirements on the XRP Ledger. The fund’s loans will be issued and repaid in RLUSD.

XRP price rises amid broader crypto rally

XRP’s price has increased nearly 20% in the past 24 hours, reaching $1.30, and is up 30% over the past week. This rise is part of a broader rally in cryptocurrency markets, which has seen major tokens like Bitcoin and Ethereum also gain value.

What is confirmed

• Ripple, Clearpool, and Cicada Partners are launching an institutional credit fund.
• The fund will lend RLUSD to fintech and payments firms.
• The fund depends on two proposed XRP Ledger upgrades (XLS-65 and XLS-66), which are not yet active.
• Clearpool is building the lending infrastructure, and Cicada Partners will manage credit risk.
• Ripple will invest in the fund as a limited partner.

What is still unclear

• The size of the fund and Ripple’s financial commitment have not been disclosed.
• The timeline for activating the required XRP Ledger upgrades is unknown.
• It is unclear when the fund will officially launch on the XRP Ledger’s main network.

Why this matters for crypto lending

If successful, the fund could increase the use of RLUSD and bring more institutional lending activity to the XRP Ledger. This could also set a precedent for other stablecoins and lending products on blockchain networks.

Sources

• CoinDesk