Input Output Global (IOG), the company responsible for Cardano’s research and development, has announced the release of a software toolkit later this month that will allow developers to deploy custom-built sidechains on the Cardano ($ADA) network.

The move is set to improve the overall ecosystem of the Cardano blockchain, as IOG noted that “purpose-built solutions are crucial for communities to address unique social and technical needs,” with Cardano sidechains being “custom solutions” that “sovereign communities” can build on a secure, interoperable parent network like Cardano.

The firm noted that it has created a technical specification for building sidechains on the Cardano network that has now been released, with sidechains that follow these specifications being bootstrapped with “Cardano’s first-in-class security and infrastructure.”

Using the toolkit, Input Output has created an example Ethereum Virtual Machine (EVM)-compatible sidechain testnet as a proof of concept. The testnet is set to be released this month, allowing the community to create smart contracts and “move tokens between the testing environment chains.”

According to the firm, the toolkit isn’t a complete solution as it looks forward to collaborating with the community as it brings in developer feedback, thoughts, and recommendations. Sidechains are separate blockchains that operate alongside the primary blockchain, known as the mainnet. They are created to enhance scalability without compromising the mainnet’s focus on decentralization and security.

IO aims to promote the widespread adoption of the Cardano ecosystem through the development of sidechains and envisions a future where multiple “Cardano sidechains and partner chains” coexist. The cryptocurrency’s community reacted positively to the announcement:

As CryptoGlobe reported, Cardano recorded the second-largest drawdown in its history last year. According to CryptoCompare’s latest Asset Report, the smart contract platform’s native token ended the year at around $0.25 after losing 81.2% of its value over its 12 months. The loss marked its second-largest drawdown, behind a 94.3% drop in the 2018 bear market, when ADA dropped from $0.71 to $0.04.

Notably, Cardano started the year off with a recovery, moving to $0.31 at the time of writing.  As reported, 20 new addresses holding over 1 million $ADA tokens have popped up recently, after the price of the cryptocurrency jumped more than 30% since the end of December, and as its trading volume rose to a 2-month high.