Crypto news: The Stellar blockchain, originally conceived as a payment platform, is currently undergoing a significant transformation to integrate “smart contracts.”
This revamp, underway after nine years since the project began, aims to make it more attractive to new applications and a broader user base. In addition, this evolution is expected to trigger a growing demand for the XLM token.
Let’s look at all the details below.
Summary
A smart contract competition with Ethereum: Stellar wants to redefine the future of crypto
As anticipated, Stellar, a payments-oriented project with nine years of history, a strong developer community, backing from a wealthy foundation and ties to MoneyGram, is about to undergo a significant transformation.
Initially designed as a blockchain to enable the transfer of value from A to B, Stellar is now embracing “smart contract” technology.
Recall that a “smart contract” project enables the deposit of a programming code on a blockchain, acting as a distributed computer, and allows developers to create applications for decentralized finance (DeFi) and other purposes.
Also, as we know, although Ethereum is the dominant smart contract platform, there are numerous alternatives, including Solana, Aptos, Sui, Algorand, and projects in the Cosmos ecosystem.
Stellar is now supported by “Soroban,” a blockchain project dedicated to smart contract integration, with implementation expected by the end of the year.
As a result, this move could represent one of the most significant upgrades to the Stellar network since its creation in 2014.
Tomer Weller, Vice President of Product at the Stellar Development Foundation, stressed the importance of decentralized finance in the future and said they want to make it accessible to Stellar users.
The Soroban upgrade could lead to more activity on the Stellar network, triggering potential additional demand for the project’s native token, XLM.
Over the course of the year, the price of XLM increased 46%, surpassing Bitcoin (BTC) but remaining below the 32% increase in Ethereum (ETH) and the 48% increase in XRP, which is used in Ripple’s payment network.
In addition, we see that, recently, the Stellar Development Foundation announced a partnership with Certora, a security platform, to support the new smart contract platform.
Certora provides developers with tools to verify the security and reliability of their applications before release.
Stellar challenges Ethereum with tough odds: differences in scale and fierce competition
As we have already mentioned, Stellar faces significant challenges as it tries to compete with Ethereum, a platform whose market value of about $190 billion is about 65 times its own.
Stellar relies on thirty full-time developers, as opposed to Ethereum’s 1,901, according to Electric Capital’s Developer Report.
In addition, Ethereum-based decentralized finance protocols have combined deposits of $20 billion, according to DefiLlama, while Stellar has an equivalent figure of only $18.5 million.
Doo Wan Nam, co-founder of StableLab, said that even existing smart contract chains are struggling to attract major projects. Therefore, it is unlikely that Stellar will seriously challenge Ethereum.
On the other hand, Sean Farrell, cryptocurrency analyst for FundStrat, also pointed out that developers and users tend to prioritize security or speed.
Hence, those who emphasize security usually choose Ethereum (or its layer 2), while those who seek speed opt for Solana.
In this context, Stellar’s entry into the smart contract space will face fierce competition from a wide range of existing solutions.
Stellar fights “State Bloat” and aims for Soroban release
In addition to the above, Stellar is also facing the challenge of “state bloat” or “ledger bloat,” a common problem in which blockchains grow steadily without ever eliminating obsolete data.
Tomer Weller, vice president of product at the Stellar Development Foundation, acknowledged the problem, citing the example of CryptoKitties, an application dating back to 2018, whose related data is still in the ledger despite becoming obsolete.
However, Stellar has learned from Ethereum’s mistakes and plans to remove unnecessary data to avoid state “bloat.”
Weller explained that this move is an “advantage of the second move,” as Ethereum would have difficulty backtracking and implementing data expiration.
Finally, recall that the Soroban project, aimed at introducing smart contracts on Stellar, moved to the testing phase on a test network on 20 September. The development team aims to launch the main network in the coming months, representing the culmination of nearly two years of work.
If successful, Soroban should be released by the end of the year, although Weller stresses caution about the expectations and robustness of the new platform.
