Ripple developers are dealing with comments and suggestions asking to extend the XRP Ledger or XRPL to integrate features such as smart contracts. The latter has become a major feature of the growing decentralized economic space, but Ripple’s creators argue that another solution that is preferable to XRPL, which is focused on payments.
This solution takes the form of so-called “federated side chains,” i.e., parallel public ledgers that can support developer expertise and the specific interests of both DeFi and other business tasks. The use of sidechains can improve the core and efficiency of XRPL, while extending the functionality of the broader XRP ecosystem, enabling smart contract internal interoperability and other features.
To facilitate interoperability, Ripples Creator offers a piece of software connected at one end to the XRPL network and at the other to one or more side chains. Each of these functions operates as a separate blockchain, but it uses XRP as its biggest advantage; In addition, the consolidation system supports the transfer of XRP and the issuance of tokens between it and the public ledger.
Auditors who run at least one side chain will be eligible to operate the consortium programme. To integrate this new software, says Ripple, two “trivial changes” are enough to get the XRPL network up and running. New features in the XRPL server software will allow to operate in the side chain, but these features will not be included in the main network itself. David Schwartz, chief technology officer at Ripple, explains the federal system:
Each side chain will have a “trusted” account on the XRPL mainnet. This account may have assets in XRPL on behalf of sidechain users. The computation uses a multisignature key or signature threshold key as the side checkers. Each validation operator in the side chain records a signing key that is used to sign transactions in XRPL; In this way, sidechain validators can collectively generate transactions to manage the Mainnet side account. ”
Each side chain can use XRP as the main asset or have its own new parent asset. In the first case, the mainnet sidechain account will contain all of its XRP holdings for use in the sidechain. In the latter case, the sidechain mainnet account can be used to release a new original on the XRPL mainnet.
Schwartz said the benefits of the federal system are its low-risk approach, scalability, easy support for new blockchain experiments, long-term vision that allows for advanced tools, and continuous feedback on new side-developments.
As mentioned earlier, sidechains have become a popular approach for blockchain developers to experiment with new solutions to address scaling challenges and to integrate new features into blockchain-based ecosystems such as Ethereum.