An analysis of the XRP Ledger lending mechanism reveals that depositors bear up to 90% of losses from a single loan default, despite reserves being twice the defaulted amount. When 100,000 tokens default in a single loan, only 10,000 are covered by the reserve, leaving 90,000 in vault loss. However, the same 100,000 tokens split across ten 10,000-token loans generate 95,500 in cover, leaving only 4,500 in loss. The twentyfold gap stems from how cover is calculated after each default, with loan size directly affecting depositor payouts even when total debt and available capital remain constant. The comparison uses identical settings: 1 million in starting debt, 200,000-token reserve and two 10% cover rates.
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