Speculation continues to grow over a potential partnership between Litecoin and Cardano towards achieving cross-chain compatibility. On the 17th of November, The Litecoin Foundation and Dionysis from IOHK discussed how a Velvet Fork could work for both chains. An upgrade to introduce several features to LTC such as cross-chain fund settlement, smart contracts, and improved scalability. 

Litecoin and Cardano: Velvet Fork?

This upgrade mechanism for a blockchain is not a hard fork or a soft fork, because it is optional. Essentially, miners would keep securing the Litecoin network whether they choose to install the upgrade or not. As a result, there is no need for majority consensus when performing a velvet fork. Both teams have been actively discussing collaboration options for blockchain interoperability since July.

If the partnership moves ahead, the idea is to implement Non-Interactive Proofs of Work. Because NiPoPoWs enable block verification across different blockchain networks. As a result, Cardano would be able to verify the NiPoPoW transaction from the Litecoin sidechain (where the velvet fork upgrade exists). And perform a smart contract function off the back of that action. To summarize, this technology enables blockchains to talk to each other much like APIs.

Bullish upgrade for Litecoin?

What’s interesting about this proposal is that it has little to no impact on the main chain’s security. Yet it would bring various benefits to Litecoin in the form of additional cross-chain use cases and scalability. Furthermore, the discussion spoke of how NiPoPoWs could create interoperability between Litecoin and other smart contract capable chains. Meaning it would not lock Litecoin into working solely with Cardano in any way. Additionally, the code is lightweight (~100 lines) and exists open-source in Bitcoin Cash’s testnet.

The catch is that if too few miners choose to update well then the new features would not work. So despite the proposal being an optional upgrade, for the tech to work, it needs community backing.

The proposal does face opposition from Litecoin’s community, with one commentator stating that “Projects that are going after hype and gimmicks don’t last long in this space.” Ultimately, with hindsight, the argument of “DeFi economy is just hype” may prove to be a very narrow-minded one. So it seems plausible the Litecoin team might want to make a safe bet?