XRP Ledger developers have proposed a new update to fix a small but important problem in how loan repayments are calculated. The proposed change aims to correct rounding differences that can build up over time and cause borrowers to pay slightly more than their scheduled amount in the final loan installment.
The update was introduced in a GitHub proposal on November 6 under the planned LendingProtocolV1_2 amendment. Its main purpose is to make sure that outstanding loan balances remain consistent with the original repayment schedule, preventing small calculation errors from adding extra amounts to the final payment.
The issue comes from the way XRP Ledger currently calculates loan repayments. Each installment is calculated separately, and small rounding differences can accumulate as borrowers continue making payments. In some cases, this can leave the remaining balance slightly higher than expected, forcing the borrower to pay one additional unit in the final installment.
The proposed update would introduce a calculation method known as telescoping. Instead of allowing small differences to build up with every payment, this method would calculate the remaining loan balance based on the number of installments still left. This would help keep the outstanding balance aligned with the original repayment schedule.
Under the proposed LendingProtocolV1_2 rules, every on-time LoanPay transaction would adjust the remaining loan balance to match the scheduled amount for the payments still outstanding. The adjustment would also be limited by the rounded periodic payment, helping prevent unexpected increases in the amount borrowers need to pay.
Developers have also proposed changes to two important parts of the lending system: LoanSet, which establishes loan terms, and LoanPay, which handles repayments. The first part of the update separates the scheduled loan value calculation into its own function called scheduledValue. This would allow loan creation and repayment processing to follow the same rounding method.
Another part of the update focuses on borrowers who pay more than their scheduled installment. When an accepted overpayment is made, the system would recalculate the remaining balance using the revised payment schedule. This would help keep future installments consistent and prevent earlier rounding differences from carrying forward.
The developers have tested the proposed changes across three different vault accounting methods: Legacy, CashBasis, and FixedPrecision. Testing also covers different amendment settings, existing loans, and situations where borrowers make additional payments.
However, the update will not automatically remove every rounding difference from loans that were created under the older system. Existing loans that already carry a small difference in their remaining balance may continue to have it until a qualifying overpayment is made. As a result, some borrowers could still face a final installment that is one unit higher than the scheduled amount.
The proposal also includes special handling for zero-interest loans because their principal and total loan values use different rounding calculations. Developers have added safeguards to prevent repayment calculations from creating negative unpaid interest or other unexpected balance results.
The new proposal is part of XRP Ledger’s wider effort to introduce native lending services. The planned system would allow loans to be funded through Single Asset Vaults, where deposited assets are pooled to provide funding. Brokers would handle borrower assessments and credit risk outside the blockchain.
XRP Ledger introduced earlier lending and vault-related changes through its version 3.4.0 update, including closed-ended vaults and cash-basis accounting under LendingProtocolV1_1. However, the wider lending framework has not yet received the validator support needed for mainnet activation.
Under XRP Ledger’s amendment process, a proposed network change must receive support from more than 80% of trusted validators for two consecutive weeks before it can become active. Previous validator voting showed that the lending and vault amendments had not yet reached the required support level.
For now, LendingProtocolV1_2 remains under development, and the latest repayment correction is still being reviewed. Developers have not announced a mainnet activation date. The proposed change is another step toward making XRP Ledger’s native lending system more accurate and reliable before it becomes available on the live network.