Key Takeaways
- Arf reports approximately $10 billion in annual global settlements.
- Its short-term financing is typically repaid within one to five days.
- Expansion into native lending requires approval of network rule changes.
Payment Companies Gain Another Source of Settlement Funding
Licensed payment companies will gain access to RLUSD financing on the XRP Ledger (XRPL) through a partnership Arf announced on Oct. 22. The Zug, Switzerland-based settlement liquidity provider reports approximately $10 billion in annual global settlement volume. Its settlement financing partnership with Ripple will initially provide working capital directly on the network.
Arf co-founder and CEO Ali Erhat Nalbant said:
“Payment companies need capital to keep money moving while they wait for funds to settle.”
Ripple also highlighted RLUSD working capital for licensed payment companies in an Oct. 22 post on X. Participating financial institutions can manage fiat and stablecoin treasuries through Arf, supported by its bank accounts in major financial hubs. The underlying blockchain operates behind the scenes.
Repayments typically arrive within one to five days as the underlying payments settle, according to Arf’s announcement. That allows funds to be lent again across successive transactions. The company reports that its capital turns over four times monthly across its existing business.
Native XRPL Lending Depends on Network Approval
Arf plans to move more of its financing activity onto XRPL’s native lending infrastructure once it becomes available. Single Asset Vaults would pool and manage funds on the blockchain, while the Lending Protocol would enable loans from those pools. Arf would retain responsibility for credit assessments and working capital decisions outside the network.
XRPL documentation describes fixed-term lending from pooled assets and mechanisms for recording loan terms and managing repayments. These functions would administer financing after the lender and borrower agree on terms, with loan activity recorded directly on the ledger.
The institutional credit framework outlined by Ripple in June identifies two technical specifications: XLS-65 defines Single Asset Vaults, while XLS-66 specifies the Lending Protocol. These describe how pooled capital would be held and extended as loans.
XLS-65 and XLS-66 are amendments, changes to network rules that require validator approval before taking effect on mainnet, XRPL’s live transaction network. Current requirements also include LendingProtocolV1_1, an amendment updating vault and lending rules.
RLUSD Financing Builds on Institutional Lending Plans
RLUSD would serve as the asset for loan disbursements and repayments, extending the use of dollar-linked stablecoins in payment settlement. XRP would support network operations through transaction fees and reserve requirements for accounts and certain ledger objects, giving the two assets distinct functions within the arrangement.
Soil, a fintech lending platform operated by institutional asset manager Orqo Group, is also preparing to use the proposed infrastructure. Its institutional vault plans center on pooling RLUSD from institutional lenders, with blockchain records supporting loan accounting and reporting.
Clearpool, a decentralized lending marketplace, and Cicada Partners, an institutional credit manager, are developing a separate RLUSD lending initiative for fintech, payments, and cryptocurrency businesses. Clearpool is building the lending infrastructure, while Cicada will select borrowers and monitor credit risk.
Arf has already developed an implementation against the proposed protocol and will continue providing feedback as a design partner. It plans to transition its program to native lending infrastructure after the required amendments activate on mainnet.
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