Ripple’s developers believe that using a federated sidechain, in addition to expanding the functionality of the general ledger, will help maintain the blockchain’s simplicity and payment efficiency.
Ripple to incorporate functions such as smart contracts in XRP Ledger
Ripple’s developers have listened to feedback and suggestions to expand the XRP Ledger or XRPL to incorporate functions such as smart contracts. The latter has become a key feature of the booming decentralized financial sector, but the makers of Ripple claim that different solutions are better for payment-oriented XRPL.
The solution comes in the form of so-called “federated sidechains”, i.e. a parallel ledger that can support the experimentation and professional interest of developers, be it DeFi or other use cases. The use of sidechains can make the main XRPL streamlined and efficient while at the same time expanding the functionality of the broader XRP ecosystem by providing interoperability for native smart contracts and other functions.
To promote this interoperability, the creators of Ripple proposed a kind of “Federator” software, one end of which is connected to the XRPL-Ainnet and the other end to one or more sidechains. Each of them works as their own blockchain but use XRP as their main asset; In addition, the federal system supports the transfer of XRP and issues tokens between them and the ledger.
Auditors who operate at least one sidechain are authorized to run the network software. To integrate this new software, according to Ripple, only “two trivial changes” need to be made to the operation of the XRPL network. New functions of the XRPL server software allow execution in the sidechain, but these functions are not activated in the mainnet. David Schwartz, CTO of Ripple, further outlined the common system:
“Each sidechain would have a ‘trust’ account on the XRPL Mainnet. This account can hold assets on the XRPL on behalf of users of the sidechain. The account would use a multisign or threshold key with the signers being the validators of the sidechain. Each sidechain validator operator registers a signing key that signs transactions on XRPL; thus, the validators of the sidechain can collectively create transactions to manage the sidechain’s Mainnet account.”
Sidechain Can Choose XRP As a Native Asset
Each sidechain can choose whether they want to use XRP as a native asset or have their own new native asset. In the first case, the account in the mainnet of the sidechain contains the entire Trust XRP inventory that is used in the sidechain. With the latter, the mainnet account of the sidechain can be used to issue new native assets in the XRPL mainnet.
Schwartz explained that the benefits of the common system are its low-risk approach, horizontal scalability, easy support for new blockchain experiments, and a long-term vision that can adapt to the evolving toolset and continuous feedback to develop new sidechains.
As previously reported, sidechains have become a popular method for blockchain developers to try new solutions to scaling problems and to incorporate new features into established blockchain ecosystems like Ethereum.