New XRPL Sidechain Proposal Targets Options Trading and Leverage Capabilities

• A new proposed XRPL sidechain would create American-style options and 200x leverage directly in the XRP Ledger system.
• It will be designed with a trustless cross-chain bridge, as well as support for webAuthn passkeys that are signed by the current XRPL validator network.

A new proposal for an XRP Ledger (XRPL) options sidechain has emerged, introducing a system that enables the network to offer more advanced trading and derivatives functionalities. The idea, discussed by XRPL Labs software engineer Denis Angell in a GitHub document, is to introduce ‘American-style’ options, a 200x leverage limit, and a trustless cross-chain bridge into the XRPL ecosystem. Analyst WrathofKahneman termed the initiative a significant move for traders seeking an on-chain substitute to centralized exchanges.

Crypto options activity remains concentrated on centralized exchanges such as Deribit, while on-chain options remain limited in accessibility and performance. The proposal states that a purpose-built sidechain could address those issues by providing an order-book environment similar to derivatives-focused blockchains. The model is inspired by Hyperliquid, a chain which attracted the attention of professional traders due to large daily trading volumes and a native order-book design.

According to developers, the XRP Ledger does not have a native derivatives layer even as its liquidity in XRP and issued assets increases. However, issued assets, including RLUSD stablecoins and tokenized bonds, can now be settled flexibly with the use of Trustline-based tokens and Multi-Purpose Tokens (MPTs) on the mainnet using the Token Escrow (XLS-85) feature. The suggested sidechain alternatives would expand on such developments by providing advanced trading markets with the same validator model applied on XRPL.

XRPL’s Proposed Architecture and Trading Features

Based on the document, the sidechain adds three system essentials: protocol-level bridging between the sidechain and XRPL, native options and margin trading, and webAuthn/FIDO2 passkey authentication. The bridge mechanism enables the transfer of assets between environments without a centralized custodian, contributing to transparency and efficiency for traders using leveraged instruments.

The trading engine is designed to provide ‘American-style’ options and 200x leveraged margin positions. The design is intended to align with the requirements of institutional and professional traders who need high-performance on-chain execution. Hyperliquid has already demonstrated that decentralized perpetual futures markets can be implemented with the quality and guarantee of centralized exchanges. However, a similar approach to options has not yet been implemented on a large public exchange. Developers believe that XRPL’s validator structure can support such a system.

Native passkey authentication enables the user to sign a transaction through face and touch ID or hardware security keys. This model is consistent with the security requirements of financial institutions and aims at minimizing friction among traders of options and leveraged positions.

As we reported, Ripple has allocated more than $550 million to the XRP Ledger ecosystem development since 2017. The company plans to broaden its support model with initiatives such as a fintech builder program, the XAO DAO and additional backing for XRPL Commons. These programs aim to attract builders who can expand XRPL’s utility through infrastructure and application-level innovation.

Despite the XRPL update, XRP has failed to recover as global markets face uncertainty over ongoing conflicts in the Middle East. At press time, it was trading at $1.35, a 2.3% decline after failing to breach resistance at $1.50.