Ripple’s developers have been engaging with feedback and suggestions to expand the XRP Ledger, or XRPL, to integrate functionalities such as smart contracts. have become a major feature of the latter Fast growing decentralized finance Space, but Ripple’s creators claim a different solution is better for payments-focused XRPL.
this Solution This comes in the form of what they call a “federal sidechain”, i.e. parallel ledgers that can support the experimentation and special interests of developers, be it for DeFi or other use cases. Using sidechains can streamline and efficient the core XRPL while expanding the functionality of the broader XRP ecosystem by offering interoperability for native smart contracts and other features.
To facilitate this interoperability, Ripple’s creators are proposing a piece of “Federator” software, which is linked on one end to the XRPL Anet, and on the other, to one or more sidechains. Each of these functions as their own blockchain but they use XRP as their main asset; In addition, the federation system supports the transfer of XRP and issuance of tokens between them and the main ledger.
Verifiers operating at least one sidechain will be eligible to run the Federator software. To integrate this new software, Ripple says it only needed to make “two small changes” to the operation of the XRPL network. New features on the XRPL server software will allow it to operate in a side chain but these features will not be enabled on the mainnet itself. Further outlining the federated system, Ripple’s Chief Technology Officer David Schwartz writes:
“Each sidechain will have a ‘trust’ account on the XRPL mainnet. This account can hold assets on XRPL on behalf of users of the sidechain. The account will use a multisign or threshold key with the signers being the validators of the sidechain. Registers the signing key that signs transactions on XRPL; thus, sidechain validators can collectively create transactions to manage the sidechain’s mainnet accounts.”
Each sidechain can choose to either use XRP as its native asset or have its own new native asset. In the first case, the sidechain account on the mainnet would consist of the total XRP holdings in trust for use on the sidechain. In the latter, the sidechain mainnet account can be used to issue new, native assets on the XRPL mainnet.
Schwartz said the advantages of the federated system are its low-risk approach, the potential for horizontal scaling, simple support for new blockchain experiments, and a long-term vision that can accommodate an evolving toolset and ongoing feedback on new sidechain development.
As mentioned earlier, sidechains have become a popular approach for blockchain developers. To try new solutions to solve scaling issues and integrate new functionalities into established blockchain ecosystems such as Ethereum.