Banking the unbanked has been touted as one of the core use-cases of crypto since its inceptionâbut the industryâs faced challenges in the form of high transaction fees and a lack of dedicated infrastructure.
The launch of the Soroban smart contract platform on Stellar is aiming to change that.
Launched earlier this year with the Protocol 20 update, the upgrade to the Stellar network introduces smart contracts into the Stellar ecosystemâand aims to bring the industry closer to its goal of becoming the digital financial rails for those without access to banks or other financial services.
âStellar is ten years old this year,â Nick Gilbert, Director of Product at the Stellar Development Foundation, told Decrypt. âThe first eight years or so was spent establishing cross border payments, on-ramps, and off-ramps, in order to really build out a fully fleshed-out ecosystem on Stellar. The next step was smart contract functionality.â
It's a monumental day as we extend a warm welcome to ALL builders to Stellar Mainnet!
Soroban, the smart contracts platform on Stellar, is now live, empowering anyone to create, deploy, and interact with Stellar-based dapps.
What will you build? https://t.co/aGFl2mVh2v
â Stellar (@StellarOrg) March 19, 2024
Why smart contracts on Stellar matter
Soroban is a Rust-based smart contracts platform designed for âscale and sensibility,â leveraging the wide-ranging Stellar ecosystem.
That ecosystem means that when developers build products or applications on Stellar, they arenât building for a potential future customer who isnât there yet because the infrastructure doesnât exist. Instead, theyâre building for real customers who can access their products right nowâand can afford the transaction fees needed to play.
âExisting services built on DeFi are not broadly accessibleâparticularly to underbanked, unbanked, and people living in the developing world,â Gilbert said, adding that transaction costs like Ethereum and CEX fees are ânot economically tenable to these users.â
The Stellar Development Foundation believes that the ease of access with which people can join the Stellar ecosystem via its network of on-rampsâcoupled with low transaction fees and the launch of the Soroban smart contracts platformâmake Stellar a more attractive destination for developers to build their next project.
Building DeFi on Stellar
âOne area that has great potential is decentralized finance (DeFi),â Gilbert said. âIf our focus is serving the unbanked market, the ramp network we have allows the whole unbanked community to actually interact with DeFi,â she explained. âIt opens up a fairly large addressable market of people that didn't even have access to DeFi previously,â he added.
According to Gilbert, developers need the reassurance of working with an established chain. âBuilding DeFi products on a "new" chain introduces risks,â he said. âWill there be users? Is there sufficient liquidity?â
While smart contracts may be new to Stellar, itâs a well-established ecosystem, which has grown to over eight million accounts, plus an array of applications, wallets, developer tools, users, and volume.
Seasoned developers choosing to build on Stellar also benefit from not having to learn a new or unique programming language to get started. Soroban utilizes Rust as a language, and WASM as an execution environment.
âSoroban isnât trying to reinvent the wheel like some alternatives,â Gilbert said of the decision to use Rust, adding that the aim was, âmaking it as easy as possible for developers to go from idea to deployment. Developers can create more, faster.â
âThe launch of Soroban smart contracts,â Gilbert explained, âmeans that developers will be able to build products like AMMs and lend/borrow markets for the unbanked demographicâwith the peace of mind that theyâll be able to access and afford it.â And, he added, what developers build on Soroban âactually has a path to connect with real world payment rails.â
Sponsored post by Stellar Foundation
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