In a recent tweet, XRPL Labs software engineer Denis Angell shared a GitHub document that proposed an options sidechain for XRP Ledger. This he shared with a caption, “Something big.”
XRP enthusiast WrathofKahneman engaged with Angell’s tweet, sharing details of the proposal in an X post.
Options are regarded as a powerful financial instrument. In crypto, options volume is dominated by Deribit, which is a centralized exchange. On-chain options are nascent and in high demand from institutional and professional traders.
Reason for options sidechain given
The proposed XRPL options sidechain would be the native derivatives layer for XRP Ledger. It draws inspiration from Hyperliquid, which has proven that a purpose-built chain with a native order book can dominate DeFi derivatives.
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Crypto derivatives are a multi-trillion-dollar market. On-chain, it is almost entirely dominated by centralized exchanges and a handful of chains that were not built with derivatives in mind. Hyperliquid changed the game by building an L1 with a native order book baked into the chain itself and captured billions in daily volume and the mindshare of the most serious traders in DeFi.
XRP Ledger has never had an equivalent, and hence the proposal of the XRPL options sidechain.
Proposed XRPL options sidechain explained
The XRPL options sidechain is a purpose-built trading chain that brings American-style options, up to 200x leveraged margin trading and a trustless cross-chain bridge to the XRP Ledger ecosystem, secured by the same validator network that secures XRPL. Hyperliquid proved perpetual futures can be done on-chain at CEX quality, but no one has done the same for options.
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Developers highlight XRP Ledger’s federal validator model to support the kind of trusted committee design this sidechain requires. The XRPL community has deep liquidity in XRP and a growing ecosystem of tokenized assets via MPtokens. A derivatives layer will capture this value and put it to work.
The options sidechain includes native webAuthn/FIDO2 passkey support, meaning traders can sign transactions with face ID, touch ID or hardware security keys, an authentication standard used by banks and enterprises worldwide.
Three interlocking systems implemented natively at the protocol level include a trustless cross-chain bridge, native options and margin trading and passkey authentication (webAuthn/FIDO2).