XLS-65.4 draft lets an XRPL vault owner refill a vault after a loan default without minting shares

Serguey Asael Shinder05 October 2026, 07:182 min read

A draft amendment specification for the XRP Ledger's single-asset vaults, XLS-65.4 "Vault Donation", was opened in the XRPL-Standards repository on 1 October by Vytautas Vito Tumas of Ripple. It adds a way for a vault's owner to put assets back into a vault without receiving anything in return.

The problem it solves. XRPL vaults pool an asset and can lend it out through the ledger's lending protocol. According to the specification, a vault can lend out its whole balance and then have the loan default, leaving shares outstanding and no assets behind them. An ordinary deposit into such a vault mints new shares at par, so a new depositor is diluted by existing shares that are worth nothing. Until now the only way to add assets to a vault was an ordinary deposit, which always mints shares.

The mechanism. A new flag, tfVaultDonate (value 0x00010000), on the VaultDeposit transaction turns a deposit into a donation: the amount moves from the vault owner into the vault, AssetsTotal and AssetsAvailable rise, and no shares are minted, so every outstanding share becomes worth more. The rules:

• only the vault owner may donate; anyone else gets tecNO_PERMISSION;
• the vault must have outstanding shares, otherwise tecNO_PERMISSION;
• the vault's AssetsMaximum still applies;
• donations are allowed in every phase of a closed-ended vault, including after the subscription date, because they mint no shares.

Gating and status. Everything is behind the LendingProtocolV1_2 amendment; before it is enabled, the flag is rejected with temINVALID_FLAG. The reference implementation is rippled pull request #6383, opened in February and still open, which adds invariant checks that a donation changes no share balances, comes from the owner and finds shares outstanding. The specification's status is Draft.

What it means

Lending vaults on a public ledger need an answer to the question every fund faces after a bad loan: how to restore backing without unfairly diluting or enriching anyone. A share-free owner deposit is the simplest answer, and writing it into the protocol makes recapitalisation a visible on-ledger act. It does not oblige an owner to do it, so depositors still depend on the owner's willingness after a default.