According to a recent post by Ripple CTO David Schwartz, the XRP Ledger is introducing Federated Sidechains, which will allow developers to implement highly-requested new features like native smart contract functionality.
Unlike Ethereum, whose smart contract functionality has helped to propel an NFT boom, Ripple has been razor focused on making payments as efficient as possible. Adding extra features that jeopardize the gross settlement system’s ability to settle transactions in three to five seconds according to their website might potentially dilute their greatest strength.
Under the new system, developers can enjoy the power of the original ledger on a sidechain that acts as its own blockchain. This way, each individual sidechain can retain a tight scope and focus on one single feature or use case —much like how the original ledger is singularly committed to fast payment processing. The sidechains can each set their individual fee system, reserve system, and transaction capacity.
Each sidechain can also introduce their own native cryptocurrency, though XRP will still retain its special status across the entire Ripple network. The XRP Ledger Mainnet, the central node of the new system, will document and manage the total assets on each individual sidechain, keeping track of anything coming in and out. Meanwhile, ownership of assets within the sidechain will not need to be tracked by the Mainnet, saving precious space and computation time on the common blockchain supporting the new sidechains.
With smart contract capabilities available on sidechains, Ripple will be able to support applications similar those already existing on the Ethereum network. Decentralized, self-executing processes are seen as especially revolutionary in the area of finance, which has historically seen middlemen and censorship. It has also been used to create provably fair electronic casinos, which allow players to verify the integrity of every bet.
Schwartz says that successful features could even be ported to the Mainnet. The process for this has not been explained, but motivated developers might be excited to try making their fresh new ideas into official features.