[Proposal] Institutional DeFi Insurance Protocol for XLS-0066 Vaults (XLS-0098)

[wflores9]

High Level Overview of Change

Proposes a new Ecosystem Draft XLS for an institutional insurance protocol for XLS-0066 lending vault depositors.

Context of Change

Linked discussion: #474

XLS-0066 vault depositors face uninsured tail risk when borrower defaults exceed First-Loss Capital protection. This proposal defines an ecosystem-layer insurance protocol using existing XRPL primitives (XLS-0020 NFTs, XLS-0030 AMM, native Escrow) without requiring any protocol amendments.

Reference implementation is live on XRPL testnet:

• Website: https://wardprotocol.org
• API: https://api.wardprotocol.org
• GitHub: https://github.com/wflores9/ward-protocol
• 60 automated tests, 75% code coverage

Type of Change

• New XLS Draft

Future Tasks

• Coordinate testnet demonstration with XLS-0066 implementers
• Apply for XRPL Foundation Spring 2026 grant
• Propose XLS-104 amendment if ecosystem adoption warrants protocol-level primitives

[github-actions]

🎫 XLS Number Assignment

This PR adds a new XLS draft. The next available XLS number has been determined:

Draft Directory	Assigned Number	New Directory Name
XLS-draft-insurance-protocol	XLS-98	xls-0098-insurance-protocol

Next Steps for XLS Editors

Before merging this PR, please:

1. Rename the directory from XLS-draft-insurance-protocol to xls-0098-insurance-protocol
2. Update the preamble in the README.md:
   • Set xls: to 98
   • Set status: to Draft

---

This comment was automatically generated. The XLS number is based on the highest existing number in the repository at the time this PR was opened.

[wflores9]

Tagging a few developers who may find this relevant: @Tapanito given your work on vault-block-deposit and vault-enhanced, would XLS-96 address a gap for your vault users? @mDuo13 @dangell7 feedback welcome on the ecosystem approach vs. a future amendment path.

[mvadari]

@wflores9 there is a bug in the XLS number assigning bot. I've edited the bot comment, please revise

[wflores9]

Please, let me know if any other correction is needed, thanks!

[mvadari]

Please, let me know if any other correction is needed, thanks!

Please see the bot comment, which says 98.

[wflores9]

Completely missed that, thanks!

[mvadari]

@wflores9 please stick to just one PR and close the other.

[wflores9]

XLS changed to 98?

[wflores9]

Please review, thanks.

[wflores9]

@mvadari PR is cleaned up — directory renamed to XLS-0098-insurance-protocol, preamble updated to xls: 98, and #479 closed. Apologies for the noisy commit history from the numbering back-and-forth. Ready for review when you have a chance, thanks!

[mvadari]

@wflores9 have you gotten any input/feedback from others in the community? Is there anyone who plans to use your standard other than you?

[wflores9]

Hi @mvadari — thank you for engaging.

To be transparent: I haven't had direct conversations with other builders yet, but I've tagged @sappenin and @Tapanito in Discussion #474 given their work on XLS-66/XLS-65 — hoping to get their perspective on whether this fills a real gap.

The case for the standard:

XLS-66 vaults expose depositors to default risk beyond first-loss capital. Right now there is no on-chain insurance primitive for XRPL lending. Evernorth Holdings (Nasdaq: XRPN), backed by Ripple and SBI Holdings, has publicly committed to deploying $1B+ in XRP into XLS-66 vaults — and institutional capital at that scale requires a risk coverage layer before it can move.

Ward Protocol is my attempt to define that standard before the need becomes urgent. What's built so far:

• Live API at api.wardprotocol.org
• 9-step automated claim validation engine
• XLS-20 NFT policy certificates
• XLS-30 AMM-backed insurance pool

I recognize this is early and community adoption is the right bar. What would you need to see — from the spec or from community engagement — to move this toward non-draft status?

[mvadari]

For something to be considered an XRP Ledger Standard - and especially an Ecosystem XLS - there should be at least some meaningful community discussion and engagement behind it. Broad consensus across the entire community isn’t required, but there does need to be evidence that others have reviewed, discussed, and support moving it forward.

At this stage, this appears to be an individual proposal without that broader input, so it’s better framed as an idea or proposal rather than a standard.

I’m going to close this PR for now. Please feel free to reopen it once there’s been some additional community discussion and feedback demonstrating interest and alignment from others.