XRP Lending Outlook: Expert Highlights Road to Higher Returns

XRP lending has become a hot topic among crypto investors seeking passive income options, but significant growth in lending returns hinges on future developments in regulation and platform infrastructure.

Vandell Aljarrah, co-founder of Black Swan Capitalist, recently ignited discussion on X (formerly Twitter) by advising XRP enthusiasts to think long-term when considering lending their assets. Aljarrah argued that meaningful yields from XRP lending aren’t achievable via current decentralized finance (DeFi) protocols alone and will require more robust institutional involvement.

According to Aljarrah, one critical factor will be mainstream financial advisors recommending XRP to wealthy clients. He emphasized that to attract such adoption, a regulatory framework that offers insurance and lender protection must be established. In the absence of these safeguards, he believes the potential lending gains may not justify the risks.

Compared to leading blockchains like Ethereum and Solana, the XRP Ledger (XRPL) still offers limited native DeFi functionality. Currently, most XRP remains stagnant, with only a handful of early-stage projects attempting to generate modest returns for holders. This has led to a rise in third-party lending services, but these platforms come with varying degrees of risk.

Community Divided on Lending Risks

Aljarrah’s perspective received a mixed reaction from the XRP community. Many users supported his cautionary tone, highlighting the dangers of lending XRP in an unclear regulatory environment. For instance, user Jack Joseph warned that jumping into lending too soon could result in unrecoverable losses. Others described the current lending landscape as the “Wild West,” echoing concerns about engaging with unregulated third-party services.

User BLKWOLFCapital specifically cautioned against using platforms that lack transparency and legal oversight, noting that the risk of losing one’s XRP currently outweighs the rewards. Another user confirmed they wouldn’t consider lending any XRP until legislative clarity ensures security for lenders.

On the flip side, some community members presented a more opportunistic view. One user, Heath Junkie, suggested that even a conservative 2% annual return on a $1 million XRP portfolio could generate $20,000 in passive income. He stated that for large holders, low-risk lending strategies might still offer worthwhile returns if managed responsibly.

In response to these varying positions, Aljarrah acknowledged that the decision to lend ultimately depends on an individual investor’s risk appetite. “There’s no right or wrong,” he admitted. While he remains skeptical of current offerings, he recognizes that some users could benefit from yields in today’s market if risks are carefully managed. His overarching message remains — keep a long-term perspective and don’t expect high returns without institutional validation and stronger regulations.

XRPL’s Evolving Staking and Lending Capabilities

In parallel to these discussions, the XRP ecosystem is steadily evolving to support native lending and staking mechanisms. Community-led efforts have emerged to bring enriched DeFi capabilities to the XRP Ledger. One notable proposal came from community member Mickle, who recommended building native staking on XRPL. He drew inspiration from Babylon Labs’ Bitcoin staking architecture as a potential model.

Flare Networks, a blockchain scaling and interoperability platform, has stepped up to support this initiative. CEO Hugo Philion confirmed that Flare is working on staking tools for XRPL integrated through Flare XRP (FXRP). These tools aim to introduce programmability and enhanced DeFi support on the ledger, paving the way for organic yield mechanisms.

From Ripple’s end, engineers have taken concrete steps toward formalizing lending and staking protocols. The XLS-65 and XLS-66 proposals were introduced to bolster the functionality of the XRP Ledger. XLS-65 proposes the creation of a “Single Asset Vault,” allowing holders to manage and stake XRP securely. XLS-66, on the other hand, introduces mechanisms for fixed-term, uncollateralized lending directly through XRPL.

Together, these proposals underscore a major transition: Ripple and its partners are actively building the technical foundation required to support decentralized, native income generation. This infrastructure could ultimately provide the insurance and structure Aljarrah and others deem necessary for long-term lending success.

Related: Expert Advice: Sell XRP If You’re Confused

Until then, XRP holders are encouraged to weigh potential gains against the backdrop of regulatory uncertainty. Whether through future innovations from Ripple or ecosystem partners like Flare, one thing remains clear — the road to secure, sustainable XRP lending is underway, but patience and caution are vital.