What Is XRPL Update: Is It Finally Ready to Beat Ethereum in RWA and DeFi?

The latest XRPL version represents the largest XRPL update since the integration of its native AMM and lending features. Introduced in May 2026, XRPL 3.1.3 comes with the addition of amendment fixCleanup3_1_3, containing fixes to NFTs, vault systems, domain permissions, and other lending amendments.

What Is XRPL Update 3.1.3 and Why It Matters for XRP Ledger?

Core Goals of the XRPL 3.1.3 Update

For users still asking what is XRPL update, the official XRPL Foundation release notes describe it as a stability-focused upgrade designed to support new on-chain financial use cases.

Another addition was automatic cleanup of expired NFT offers and accounting fixes for impaired loan positions. Validators with the old software are likely to be amendment-blocked after activation, making the XRP▼$1.18 Ledger upgrade more significant than a standard maintenance release.

How XRPL Is Evolving Beyond Payments Into DeFi Infrastructure

While XRPL was originally designed for cross-border payments, it has since developed to support lending, tokenization, AMMs, and institutional custody services. The release of Single Asset Vaults and the native lending protocol earlier this year also contributed to the growth of XRPL DeFi ecosystem.

Unlike Ethereum, financial applications on XRPL protocol increase at the protocol layer rather than using external smart contracts. XRPL backers contend that this reduces costs and increases the efficiency of regulated use cases and XRP DeFi infrastructure that use tokenized assets.

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Why Ethereum Comparison Is Becoming More Relevant Now

As Ethereum and XRPL increasingly compete for tokenization and institutional DeFi, Ethereum continues to dominate liquidity and development activity. XRPL is presenting itself as a more affordable alternative focused on compliant and fast settlement for regulated and institutional finance.

Ripple and XRPL contributors stressed that XRP Ledger’s focus is shifting towards supporting the tokenization of real-world assets (RWA) as a means of attracting banks and fintech to XRPL, rather than supporting speculative actions in DeFi applications.

XRPL Lending Protocol: Can XRP Ledger Compete With Ethereum DeFi?

What Is the XRPL Lending Protocol and How It Works

The proposed XRPL lending protocol is based on XLS-66, an amendment proposed in XRPL v3.1.x, which enables fixed-term uncollateralized loans funded by Single Asset Vaults, where liquidity providers deposit their own capital on-chain. Unlike most DeFi lending markets, lending is partially off-chain and uses institutional underwriting.

Proponents insist that it will create greater predictability and compliance for XRP lending on XRPL,, especially for regulated financial institutions in tokenized credit markets.

Differences Between XRPL Lending and Ethereum-Based Lending Protocols

Unlike Ethereum-based lending protocols such as Aave that leverage smart contracts and overcollateralized lending, XRPL lending is based on fixed terms that are part of the protocol itself, rather than implemented through code.

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Supporters of decentralized lending XRPL models cite lower transaction costs and faster settlement speeds relative to Ethereum-based protocols. Ethereum dominates XRPL in terms of liquidity, developer activity, and existing DeFi tools.

Institutional Use Case Potential for XRP Lending Infrastructure

Ripple and other XRPL contributors have increasingly characterized XRPL as providing infrastructure for regulated finance, with the lending mechanism intended for tokenized assets, permissioned access, and enterprise-grade custodial solutions.

This could help strengthen XRPL’s DeFi potential among banks and fintechs seeking blockchain-based settlement solutions with minimal costs. Adoption continues to be uncertain, as the space is still nascent and is tied to validator approval and institutional interest.

XRP NFT Marketplace Upgrade: Building a New Creator Economy on XRPL

What Changed in the XRP NFT Marketplace Upgrade

Native NFTs are a major part of the overall XRP NFT marketplace upgrade strategy. Since the introduction of the XLS-20 standard, XRP Ledger has delivered NFT minting, trading, royalties, and brokered sales without the use of external smart contracts. The update also included adjustments for NFT directories and reserve accounting.

Notable upgrades to minting have included DynamicNFT, which allows an issuer to update the metadata after minting. XRPL developers argue this creates more flexibility for gaming assets, membership systems, and ticketing, while also strengthening NFT infrastructure XRPL is building for utility-focused applications.

Scalability and Fee Advantages vs Ethereum NFT Ecosystem

The main selling point of XRPL vs Ethereum is its efficiency. NFT transfers on XRP Ledger settle in a matter of seconds, costing a fraction of a cent, compared to Ethereum’s fluctuating fees during periods of high demand. XRPL natively supports NFTs, rather than relying on custom smart contracts.

XRPL NFTs supporters believe lower transaction costs could attract gaming assets, loyalty programs, and tickets. Ethereum, however, remains the most liquid NFT marketplace, and XRPL seeks to provide a lower-cost infrastructure layer than Ethereum for mass availability of digital assets.

Can XRPL NFTs Attract Real Liquidity or Stay Niche?

Liquidity is the main XRPL challenge. Aside from XRPNFT, other platforms, for example, XPMarket, enable the growing NFT marketplace on XRP Ledger, but their trading volume is still much lower than that of Ethereum-based platforms, such as OpenSea.

Ripple and XRPL community members consider NFTs one part of a utility-focused XRP tokenization ecosystem rather than a speculative product. It is yet to be seen if this concept can provide long-term demand from creators and institutions.

XRPL Vault System: Institutional-Grade Asset Security Layer

What Is the XRPL Vault System and How It Functions

The XRPL vault system provides protocol-level asset segregation and funds management for institutional finance use cases. A part of the XLS-65d proposal, Single Asset Vaults allow anyone to deposit a single asset into a vault to create isolated pools. This can be used for lending and yield generation in tokenized finance products.

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In contrast with the Ethereum DeFi vaults, XRPL vaults are built into the ledger infrastructure instead of only being hosted in an external smart contract, which supporters argue reduces complexity and the attack surface.

Role of Vaults in RWA Tokenization and Custody Solutions

Additionally, vault infrastructure will play an increased role in tokenized RWA and blockchain custodial solutions. XRPL developer community supports vaults as part of XRP tokenization ecosystem (tokenized bonds, stablecoins, institutional settlement products).

Permissioned access and programmable withdrawal restrictions may be valuable to the wider XRPL RWA framework in industries such as banking and asset management that are subject to regulation.

Why Vault Architecture Matters for Institutional DeFi Adoption

Security and functional control concerns have been identified as barriers to institutional adoption of blockchain. XRPL participants argue that the built-in vault structure could improve institutional DeFi XRPL development by improving the predictability of the ledger’s behavior and reducing infrastructure complexity.

Vaults, alongside lending tools and permissioned domains, were therefore meant to provide a regulated and permissioned layer of XRP DeF infrastructure, with applications geared towards enterprise finance rather than retail speculation.

fixCleanup3_1_3 Amendment: Technical Backbone of the Upgrade

What Is fixCleanup3_1_3 Amendment in XRPL

The fixCleanup3_1_3 amendment is a technical feature in XRPL 3.1.3. It was included in a planned maintenance update for XRP Ledger. The official XRPL release notes for XRPL 3.1.3 state that the amendment included bug fixes for NFTs, Permissioned Domains, Vaults, and the Lending Protocol.

Its most visible consequence is the automatic deletion of expired NFT offers that were previously left on the ledger after their expiration date. Additionally, it fixes irregularities in the accounting of lending positions and withdrawal verification within the vault infrastructure.

Why This Amendment Is Critical for Ledger Efficiency and Stability

XRPL validators considered the update a critical one, even though it was labeled as a maintenance update, because the utility nodes could become amendment-blocked once the update was issued. The rollout of the update required support from most validators; all amendments must be accepted by over 80% of the network for two weeks.

This is important as the network grows with XRPL DeFi and tokenized asset infrastructure, as removing stale NFT records and fixing lending-related bookkeeping issues reduces ledger noise while improving transaction consistency for more complex monetary applications.

Impact on Smart Contract-Like Functionality and Ecosystem Reliability

Most financial features on XRPL, such as vaults, NFTs, lending, and so on, do not leverage Ethereum-style smart contracts but are instead increasingly implemented natively at the level of the protocol. The fixCleanup3_1_3 release improves the reliability of several such interrelated systems.

Supporters maintain that this type of enhancement can make XRP Ledger DeFi ecosystem more appealing to institutional players, as they usually prefer a guaranteed execution time and less operational risk. This improvement shows that XRP Ledger is developing from a payment-focused network to a broad financial infrastructure ecosystem.

XRPL vs Ethereum: Who Wins the RWA and DeFi Race?

Strengths of XRPL in Speed, Cost, and Compliance

XRPL RWA infrastructure claims that XRP Ledger is more performant than many public blockchains because of its fast and low-cost transactions, and the issuance of native tokens and permissions allows for lessened reliance on external smart contracts and lower trust requirements.

Ripple continues to identify the network as a compliant financial infrastructure rather than a speculative DeFi story. Furthermore, the roadmap’s updates on credentials, permissioned domains, and lending tools support the wider XRPL DeFi strategy.

Ethereum’s Dominance in Liquidity and Developer Ecosystem

Although the number of XRPL-related applications is growing, DeFi remains dominated by Ethereum. Most DeFi liquidity, including stablecoin usage, is concentrated on Ethereum and its Layer-2 ecosystem, with protocols such as Aave and Uniswap underlining the infrastructure for on-chain finance.

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In terms of composability, Ethereum allows users to create highly integrated applications dependent on various combinations of lending, liquidity pools, tokenization, and a host of other tools, while XRPL still has less flexibility in creating and testing new DeFi applications.

Can XRPL Realistically Close the Gap in Institutional DeFi?

The odds of XRPL overtaking Ethereum as a DeFi leader anytime soon are low. However, the competition can be heated within institutional finance. Ripple focuses on regulated settlement, tokenized collateral, and enterprise blockchain infrastructure rather than retail speculation.

Outside of the technology, one of the biggest challenges facing institutional DeFi XRPL is liquidity, or the ability to buy and sell an asset without a meaningful price impact. Whether large financial institutions bring capital and tokenized assets to XRPL will determine the success and adoption of the protocol.

Final Outlook: Is XRPL 3.1.3 a Real Ethereum Competitor or Early-Stage Experiment?

Key Risks and Limitations of XRPL Expansion

XRPL technology stack was updated to add DeFi and tokenization functionality, but it does not provide the developer scale, liquidity depth, or flexibility of smart contracts, which arguably enabled Ethereum’s dominance in DeFi.

Several amendments related to lending, vaults, and permissioned markets are still under development and have not been fully rolled out.

What Adoption Signals to Watch in 2026

But the key metric for XRPL DeFi ecosystem will likely be institutional acceptance, with Ripple focusing more on tokenized collateral, permissioned finance, and regulated lending infrastructure for banks and asset managers.

Some observers believe real liquidity creation via vaults and lending protocols will ultimately be required for the wider XRPL RWA narrative to develop, beyond simple infrastructure building.

Scenario Analysis: Coexistence vs Direct Competition

However, it is unlikely that XRPL will replace Ethereum as the dominant DeFi network, given that Ethereum has greater developer activity, liquidity, and more advanced on-chain applications.

The more likely scenario is specialization: in a world of XRPL vs Ethereum, the latter is the center of open DeFi, and XRP Ledger becomes the home of regulated finance and institutional tokenization infrastructure.