XRPL's EVM Sidechain A Trojan Horse Or True Ethereum Killer?

Ripple’s onboarded its EVM sidechain to the XRP Ledger (XRPL). The promise? Seamlessly integrating Ethereum dapps into the XRPL ecosystem, unlocking XRP's payment infrastructure, and giving developers access to millions of wallet holders. Beneath the surface of this interoperability utopia lies a question that could reshape the future of crypto: Is this a stroke of genius, or a carefully disguised Trojan horse? Better yet, is it killing Ethereum at all?

Is Interoperability Really The Answer?

The siren song of interoperability is tempting. The promise of interoperability between blockchains, exchanging data, and assets seamlessly is the holy grail. Let’s be realistic. Interoperability often comes with a hefty price tag: complexity. Complexity breeds vulnerabilities. Developed by Axelar, the bridge will be their first connection. Bridges in the crypto space are constantly under attack from hacks and exploits. Besides the tech forking, have we just created another point of failure to the XRPL, just for the purposes of attracting Ethereum developers?

Consider this: the Ethereum scaling solutions like Arbitrum and Optimism are fighting for dominance, and they have the benefit of being tightly integrated with the Ethereum ecosystem. Why would a developer choose to deploy on an XRPL sidechain, connected by a bridge, when they could choose a more native solution? The answer, one would presume, is access to XRP’s payment rails. But is that enough?

We've seen this movie before. Think back to the first few years of “blockchain not blockchain. And enterprises are clamoring for private, permissioned blockchains. What they quickly learn is that the real magic is in the decentralized and permissionless nature of public networks. Are we making the same error again, frying up isolated pockets of interoperability that instead end up splintering the ecosystem even more? This isn’t building bridges; this is building moats. Are we certain that this is the right direction to go in?

Cost Savings Or Hidden Compromises?

Ripple is promoting the low cost of deploying dapps on the XRPL sidechain. Honestly speaking, Ethereum gas fees are sometimes a highway robbery. Cheap doesn't always equal good. In the process, are we compromising security, decentralization, or performance to get these reduced costs? It’s a familiar trade-off, and one requiring great discretion.

Such a move would be significant, Schwartz’s claim that it would extend the ecosystem’s capabilities “without changing XRPL’s fundamentals” is what stands out here. It suggests that the sidechain is in some way independent, a plug-and-play adjunct that will not affect the integrity of the core XRPL. That's simply not true. The sidechain is connected to the XRPL. It does rely on XRP. Given that any vulnerability in the sidechain, or the bridge that connects it, would have ramifications for the entire XRPL ecosystem.

This is a bit like a software company putting a band-aid approach on an old legacy system rather than investing in the rewrite. The patch doesn’t address the underlying issue. Yet it does more than simplify the picture. It increases the complexity and the chance of failure down the road. Are we simply putting an EVM sidechain on the XRPL? Instead, we should work on addressing the true issues that prevent us from enjoying native smart contract capabilities. What happens when Wormhole gets integrated? Greater complexity, greater attack surface, greater potential for user confusion or just general user experience optimization and technology integration headaches.

Ethereum Killer Or Regulatory Target?

The notion that this sidechain is some sort of “Ethereum killer” is, quite frankly, a joke. Ethereum’s network effect, developer ecosystem, and track record are the contrary evidence. A sidechain on the XRPL, tied together via bridges, isn’t going to do it either.

This pretty unusual move does present some fascinating regulatory questions. Ripple has been in a protracted legal battle with the SEC. Fast forward to today where, under the guise of innovation, they’re now launching an EVM sidechain which would let developers deploy completely unregulated dapps on the XRPL. How will regulators react?

Navigating the regulatory landscape in the US is a veritable minefield. Japan, where I’m currently based, has taken a more progressive approach to regulation around crypto. Can Ripple swim upstream against a patchwork of regulatory realities? Ripple has partnered with Wormhole to improve “institutional multichain moves.” This decision is indicative of Ripple’s intention to pursue the interest of institutional investors. Institutions are notoriously risk-averse. Will they be happy to sit with the massive regulatory uncertainty around this one connectionless sidechain?

At the end of the day, it all comes down to whether the XRPL EVM sidechain can entice developers and users. Its success will rest on its capacity to withstand intense regulatory scrutiny and preserve its security and stability. The opportunity is great—the danger is too. This isn't a simple "Ethereum killer." It's a complex, multifaceted project with the potential to either revolutionize the XRPL or become its Achilles' heel. As in so many cases, only time will tell if it’s a Trojan horse or genuine innovation. It promises to be a raucous journey for sure.