If you’ve been following the blockchain space, you know the biggest headache isn’t building new chains — it’s getting them all to actually talk to each other. Liquidity is fragmented across dozens of networks, trading is slow, and fees eat into everything. That’s exactly the problem Yellow Network is tackling, and honestly, their approach is one of the most interesting things I’ve seen in a while. Let me break down what they’re doing with their Layer-3 clearing network and why their recent XRPL EVM Sidechain integration matters.
What Is Yellow Network?
Yellow Network launched back in 2018 with a clear mission: solve crypto’s liquidity fragmentation problem. The core idea is a Layer-3 decentralized clearing network called Yellow Clearnet. Think of it as an overlay network that sits on top of existing blockchains and connects isolated exchanges and brokerages into one unified liquidity pool.
The project is backed by some serious names. Ripple co-founder Chris Larsen led Yellow Network’s $10 million seed round in September 2024. That kind of backing from someone who helped build one of the largest cross-border payment networks in crypto tells you something about the potential here.
How State Channels Power Everything
The secret sauce behind Yellow Network is state channel technology. If you’re not familiar, state channels work kind of like a bar tab — instead of settling every single transaction on-chain (which is slow and expensive), you open a channel, do all your trading off-chain in real time, and only record the final balance on-chain when you’re done.
Yellow Clearnet uses a simplified version of Nitro state channels called Nitrolite, paired with nodes called Clearnodes — golang microservices that handle the off-chain ledger operations. Participants lock collateral into a smart contract to open a channel, then trade instantly with zero gas fees. Only the net settlement hits the blockchain. If there’s ever a dispute, the smart contract enforces the most recent agreed-upon state.
This gives you ultra-fast transactions comparable to high-frequency trading in traditional finance, massively reduced fees since you’re minimizing on-chain operations, and non-custodial security where users keep full control of their assets. It’s the kind of infrastructure that could genuinely bridge the gap between TradFi speed and DeFi principles.
Why Layer 3 Matters
You’ve probably heard a lot about Layer 1s (Ethereum, Solana) and Layer 2s (Arbitrum, Optimism). Layer 3 is the next evolution — application-specific protocols that sit on top of Layer 2s to solve very targeted problems like interoperability and cross-chain communication.
Yellow Network operates as a Layer 3 that’s independent of any single blockchain but facilitates their interconnection. It creates a virtual ledger network across multiple chains, delivering near-instant finality, high throughput, and low transaction fees. This is fundamentally different from bridges, which have been plagued by security exploits. State channels offer a trustless, non-custodial alternative that doesn’t require moving assets between chains in the traditional sense.
The XRPL EVM Sidechain Integration
This is where things get really interesting. In October 2025, Yellow Network announced its integration with the XRPL EVM Sidechain, and the focus is on real-world asset (RWA) trading.
The XRPL EVM Sidechain, developed by Peersyst in collaboration with Ripple and the XRPL community, is a fast and secure network that enables EVM-compatible applications to operate alongside the XRP Ledger. It connects to XRPL through the Axelar bridge, allowing XRP to move natively between the two networks and providing interoperability with over 80 blockchains. With XRP as its native gas token, faster block times, and low transaction fees, it’s an efficient environment for cross-chain DeFi and tokenization.
As Yellow Network co-founder Louis Bellet put it: “XRPL EVM Sidechain provides the foundational rails for the tokenization of real-world assets and Yellow Network offers an engine to make those assets truly liquid and tradable.”
The Bigger Picture: Uniting All Blockchains
Yellow Clearnet already integrates with Ethereum, Polygon, and Binance Smart Chain. With XRPL now connected, the roadmap includes Solana, Bitcoin, and Polkadot. The vision is ambitious but clear — create a single unified liquidity layer that connects every major blockchain.
The practical implications are huge. Imagine being able to trade tokenized real-world assets across any chain, with instant settlement, minimal fees, and no custodial risk. That’s what Yellow Network is building toward. Their SDK is already available for developers, and it’s been battle-tested across multiple hackathons since the Layer-3 launch in 2025.
For traders and institutions, this means access to deeper liquidity pools without being locked into a single chain or exchange. For developers, the Yellow SDK provides tools to build high-performance decentralized applications on top of this infrastructure. And for the broader crypto ecosystem, it represents a genuine step toward the kind of seamless interoperability that Web3 has been promising for years.
Final Thoughts
Yellow Network is tackling one of the hardest problems in crypto — making fragmented blockchains work together as if they were one. Their Layer-3 approach using state channels is elegant and practical, avoiding the security pitfalls of traditional bridges while delivering the speed and cost efficiency that real trading demands. The XRPL EVM integration opens up the massive RWA tokenization market, and with Chris Larsen’s backing and a growing list of chain integrations, this is definitely a project worth watching closely. Whether you’re a trader, developer, or just someone who believes in a multi-chain future, Yellow Network’s clearing infrastructure could be a key piece of the puzzle.
Michael Gu
Michael Gu, Creator of Boxmining, stared in the Blockchain space as a Bitcoin miner in 2012. Something he immediately noticed was that accurate information is hard to come by in this space. He started Boxmining in 2017 mainly as a passion project, to educate people on digital assets and share his experiences. Being based in Asia, Michael also found a huge discrepancy between digital asset trends and knowledge gap in the West and China.