What is an XRP-backed loan

Crypto-backed loans allow coin holders to access liquidity without selling their assets. Ripple (XRP) is one of the most popular cryptocurrencies used for collateralized loans. It’s often chosen for this purpose because XRP transactions are usually fast and transaction fees are relatively low.

The principle of taking such a loan is quite simple: you pledge a certain amount of XRP as collateral, and in return, you receive stablecoins such as USDT or USDC. While the loan is active, your collateral remains locked — meaning you cannot perform any operations with the funds used as security. However, once you repay the loan, your pledged coins are returned to you.

To learn more about how XRP-backed lending works, watch our detailed video on the topic:

Where to take a loan with XRP as collateral

You can take out a loan secured by XRP on any platform that offers such services. The main thing is to make sure the service is reliable, has a good reputation, and has been operating smoothly for several years at least.

Here’s where you can get an XRP-backed loan:

Cryptocurrency exchanges

Many exchanges offer their clients the option to take out a loan backed by XRP. This option can be convenient for those who already store their assets in an exchange account and want to access liquidity without transferring funds elsewhere.

Specialized crypto lending platforms

There are services designed specifically to provide crypto loans. They usually offer flexible terms and include an LTV calculation feature tailored to users’ needs. Such platforms often have convenient apps where you can take out loans and monitor their status.

Custodial wallets with lending functionality

Some crypto wallets also allow users who store their assets with them to take out loans backed by those assets. This type of lending can be suitable for those who prefer to keep their funds in a reliable and secure place. Custodial crypto wallets ensure the safety of users’ assets and often offer various additional options for gaining liquidity beyond lending.

Decentralized platforms (DeFi)

There are platforms where all processes are automated, and many of them also include lending features. This option may suit those who want to have full control over their actions. However, to use such services, it’s advisable to have significant experience with cryptocurrencies, as there are no safeguards to protect you from making mistakes.

What to consider before taking an XRP-backed loan

Before applying for a crypto loan, it’s important not only to determine the acceptable loan amount but also to assess all potential risks. Mistakes made when choosing loan terms can lead to collateral liquidation or overpayment in interest.

Here are the main points to pay attention to before taking an XRP-backed loan:

LTV (Loan-to-Value) ratio

LTV determines the value of your collateral in relation to the amount you’ve borrowed against it. A level of around 50% is generally considered safe. If the LTV is too high (for example, 80–90%), even a small drop in the price of XRP can lead to the liquidation of your collateral.

Interest rates

Compare the offers from different platforms: some charge interest daily, while others do it monthly. Find out whether there are any additional fees for early repayment and how the total loan overpayment is calculated.

Platform reliability and security

Choose services that use data encryption, multi-factor authentication (2FA), store clients’ assets in cold wallets, and openly share information about their implemented security measures.

Liquidation thresholds and notifications

Find out at which LTV level liquidation occurs and whether you can enable automatic risk notifications. This will help you react in time and avoid losing your collateral.

XRP-backed crypto lending: a step-by-step guide

You can take out an XRP-backed loan on any platform that offers such services. This could be an exchange, a wallet, or another platform that works with cryptocurrencies. The process of obtaining a loan is generally similar across all services.

Here’s how you can get a loan secured by XRP:

1. Choose a suitable platform. Select a reliable service that offers XRP-backed lending. Review user feedback and carefully read all the terms and conditions provided by the platform.
2. Deposit XRP as collateral. After choosing a platform, you can proceed with the loan application. Transfer your XRP to the platform’s account, select the lending option, and pledge your assets. The funds will be locked until the loan is fully repaid.
3. Receive the loan. Once the collateral is deposited, the platform will transfer stablecoins to your account balance, which you can freely use.
4. Repay the loan. To get your collateral back, repay the debt in full. Once you do, your pledged assets will be released and returned to you.

Is it worth taking an XRP-backed loan

An XRP-backed loan is a modern way to gain liquidity without having to sell your assets.

The key is to carefully choose a reliable platform, monitor the LTV level of your loan, and respond promptly to changes in the XRP exchange rate used as collateral.

Use XRP-backed loans wisely!