Stellar, a nine-year-old blockchain project renowned for its payment focus, is embarking on a significant transformation by introducing “smart contracts” through Stellar’s Soroban project. This upgrade is designed to attract new applications and users, potentially leading to increased demand for the XLM token.

As Stellar steps into the competitive realm of smart-contract blockchains, it seeks to challenge established platforms like Ethereum.

Stellar’s Evolution

Initially designed for facilitating value transfers, Stellar is undergoing a substantial transformation to incorporate smart contracts. The introduction of the Soroban project aims to expand the network’s capabilities, enabling developers to build decentralized finance (DeFi) applications and other use cases, similar to Ethereum.

Stellar’s entry into the smart-contracts space, known as Soroban, is expected to be integrated later this year. This marks one of the most significant upgrades to the network since its creation in 2014. Stellar’s ambition is to empower its users with decentralized finance, and Soroban is the avenue to achieve this goal.

Potential Impact on XLM Token

The success of the Soroban upgrade could potentially boost the demand for Stellar’s native XLM tokens. The XLM token has already experienced a 46% price increase this year, outperforming Ethereum’s Ether (ETH) and Ripple’s XRP. The introduction of smart contracts and an increase in network activity could further drive XLM token demand.

Stellar, a nine-year-old blockchain project renowned for its payment focus, is embarking on a significant transformation by introducing "smart contracts" through Stellar's Soroban project.

While Stellar is making strides in smart contracts, it faces substantial competition from Ethereum, with a market value significantly larger. Ethereum’s extensive developer community and well-established DeFi ecosystem present formidable challenges for Stellar.

Additionally, other blockchains, such as Solana, Aptos, Sui, Algorand, and Cosmos-based projects, are also vying for a piece of the smart-contracts market.

Resources and Foundation Support

Stellar is well-equipped for its transformation, supported by a strong foundation and a treasury holding approximately 22 billion XLM tokens, valued at around $2.3 billion. The Stellar Development Foundation (SDF) is actively promoting Soroban and has a substantial budget to support developer adoption.

Furthermore, Stellar’s partnership with MoneyGram provides users with easy access to decentralized lending protocols and DeFi applications, enhancing its competitive edge.

Innovative Technical Choices

Soroban’s design choices, such as using Rust and WebAssembly (WASM) as primary programming languages, set it apart from Ethereum. Stellar’s decision to utilize Rust puts it in direct competition with other blockchain platforms.

Stellar aims to tackle the issue of “state bloat” or “ledger bloat,” which plagues many blockchains as they accumulate unnecessary data. Stellar also allows data to expire, learning from Ethereum’s experience with ledger bloat. This approach contributes to the network’s efficiency and scalability.

Anticipated Mainnet Launch

The Soroban project went live on a test network on September 20, also with plans to launch the main network in the coming months. This achievement also represents the culmination of nearly two years of development efforts, signaling a significant step in Stellar’s journey towards embracing smart contracts.

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Tanishi is an established writer in the realm of cryptocurrency and blockchain, renowned for her expertise and insightful analysis. With a deep-rooted passion for the dynamic world of digital finance, Tanishi delivers compelling news and articles that captivate a wide-ranging audience.