XRP Ledger releases version 3.4.0 with new lending protocol

The XRP Ledger Foundation has released the xrpld server software version 3.4.0, which introduces significant updates to the network's lending capabilities and protocol stability. A central feature of this release is the LendingProtocolV1_1 amendment, which introduces closed-ended vaults. These vaults operate through three distinct stages: subscription for fund collection, investment for loan deployment, and redemption for capital recovery. During the investment phase, deposits and withdrawals are restricted.

The update also implements a shift to cash-basis accounting for new vaults. Unlike previous methods that recognized interest at the time of loan origination, the new system only records interest once it is actually repaid. This change is intended to prevent unrealized interest from being prematurely reflected in vault assets and share prices. Notably, this new accounting model will not be applied retroactively to existing vaults.

While the software has been released, the lending features are not yet active on the mainnet. Implementation requires the amendment to receive support from more than 80% of validators for a continuous two-week period. Additionally, the 3.4.0 release includes various protocol fixes for Automated Market Makers (AMMs), escrow, and transaction signing, alongside changes to how Linux server packages are distributed.