Ripple (XRP) has a market capitalization of around 40 billion US dollars. In order to make this capital usable in the DeFi division, Ripple is now proposing special sidechains for XRP.
Currently ranked 7th among the most important cryptocurrencies by market capitalization, Ripple (XRP) continues to be a big player despite all the troubles with the U.S. Securities and Exchange Commission (SEC). But investors and investors are depressed that their capital in XRP has no real use cases. XRP is hardly accepted as a means of payment in the online world, and the concept for XRP as a bridge currency in international financial transfers has not taken off. So there should be a way to at least bring XRP into the growing DeFi space, many think. The external project Flare Network wants to implement this and is in the starting blocks. But plans are also being made at Ripple itself to breathe new life into XRP in the DeFi sector. Ripple chief developer David Schwartz outlines his idea on XRP and DeFi in a blog post.
“Federated sidechains” is what Schwartz calls his proposal, meaning: Via a tested software module, sidechains could be allowed to dock with Ripple’s mainnet. Schwartz himself admits that this would mean rethinking Ripple. But he also cites the rapidly growing number of projects and developers in the DeFi space. For example, “federated sidechains” should bring together the benefits of two worlds. The actual Ripple Ledger Network remains basically unchanged in the new concept and can continue to operate quickly, securely and with low fees, Schwartz says. Using a Federator as a link to sidechains, XRP is guaranteed to maintain integrity when used outside the Ripple mainnet. And sidechains are where DeFi projects can find their place, as well as other use cases like DApps or ideas of the future.
Ripple in upheaval?
At the end of May, Ripple developers had launched a push to open XRP’s network to NFTs. So pressure is also coming from there to allow XRP to be more flexible. “Federated sidechains” would be another way and have an influential advocate in Schwartz. But with both proposals, it’s unclear how far along they are technologically and whether they can find a majority at Ripple.
Flare Networks doesn’t want to wait for that, and with its launch announced by the end of July, is likely to become a pioneer for XRP in the foreign application field of DeFi. XRP has often been pronounced dead in terms of content – perhaps a comeback will succeed in practice after all. An agreement of Ripple with the SEC would certainly be helpful and is apparently driven by prominent personalities.
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