Ripple, the company behind the XRP cryptocurrency, has partnered with blockchain security firm ImmuneFi to launch an “attackathon” in hopes of bolstering the security of its soon-to-be-released XRP Ledger-based lending protocol.
Ripple is offering a reward of US$200,000 (AU$306k) for any ethical hacker who can find a vulnerability during the “attackathon.”
This program is a time-boxed, adversarial competition, where security researchers dive into the code to ensure the protocol has the strongest possible security posture, surfacing vulnerabilities before they reach production.
The priority areas Ripple and ImmuneFi want hackers to target are those which “directly impact fund security or vault solvency,” including liquidation logic bugs, interest accrual bugs, vulnerabilities around interacting with vaults (a kind of secure liquidity pool), and administrative attacks that could alter internal protocol records and account balances.
ImmuneFi said, “if even one valid bug is found during the program, the full $200,000 is unlocked and will be distributed.” If no bugs are discovered during the event, a smaller pot of $30,000 (AU$46k) would be shared among participants who “submitted valid insights”.
To expand access as widely as possible, Ripple and ImmuneFi are running a 2-week educational period prior to the start of the ”attackathon” to help developers unfamiliar with XRP Ledger get up-to-speed with its codebase and architecture. The “attackathon” proper will begin October 27 and run until November 29.
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Ripple describes the launch of the new XRPL Lending Protocol as its “most significant near-term milestone.” It’s expected to enter production with the rollout of XRPL 3.0.0, which is due later this year.
The Lending Protocol will bring fixed-term, uncollateralised loans to the XRPL. According to Ripple, loan issuance will be managed on-chain through “contracts between lenders and borrowers, while underwriting and risk management remain off-chain, where institutions already have mature models.”
“Borrowers gain access to more efficient, lower-cost funding. Lenders earn yield on otherwise idle assets. Loan managers can meet rising demand from traditional finance by tapping into the growing pool of digital asset liquidity.”
The protocol itself won’t hold collateral. However, institutions will be able to structure collateralised loans leveraging the XRPL Lending Protocol through agreements with third-party custodians. Ripple believes arrangements like this will offer an innovative combination of XRPL’s transparency with the “safeguards of regulated custody.”
Related: Ripple Labs Sets Sights on Institutional DeFi with New XRP Ledger Ecosystem Blueprint
It said this combination offers institutions an irresistibly attractive automated lending platform while also improving efficiency and funding costs for borrowers.
No financial institution will turn down low cost capital if it can be sourced within KYC/AML standards. The lending protocol enables exactly that, pooling liquidity from a global base of smaller investors into institutional-sized loans while maintaining compliance.
Jody is a Brisbane-based freelance writer who specialises in writing about business, technology, and the future of work.
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